Part 1: Identify the accounting principle or assumption that best reflects each situation.

1. AAA Painting performs services for a customer this period. AAA records revenue for this period even though the customer is not billed until next period. 

2. Ming Studios purchases camera equipment for $12,000 cash. The owner thinks the equipment is worth $18,000. The equipment is recorded at $12,000. 

3. Alfonso owns Consulting LLC. Alfonso keeps personal expenses separate from LLC expenses.

Part 2: Recommend a business entity type in each situation. 

a. An entrepreneur is deciding between a sole proprietorship and an LLC. Two goals are to pay no additional business income tax and to have limited liability. 

b. An entrepreneur is deciding between a partnership and a corporation. Two goals are the ability to add many investors by selling shares of ownership and a business with an indefinite life.