25 A Xfx Conservatism Chapter 2, Question 1 Accounting principle Conservatism Consistency Cost Distinct business entity Full disclosure Going concern Matching Materiality Monetary unit Objectivity B Time period Business Activity Accounting Principle D (c) (d) (a) A hotel purchases a new PMS and then, each month, expenses a portion of the system's cost over its useful life. The value of land purchased by a business owner is recorded on the (b) business's balance sheet at the land's purchase price, rather than at the land's currently appraised value. A bar maintains its daily sales records in a POS system and then utilizes those records to prepare its monthly income statement. The expenses of a hotel's owners are kept completely separate from those of the hotel they own. Consistency Cost Full disclosure Distinct business entity (e) A seasonal resort indicates on its financial statements that its fiscal year runs from October 1 to September 30. Time period (f) (g) Title Page Ready Each month a hotel records accrued payroll expense due and payable in the following month. A restaurant expenses, in the month they were purchased, the full cost of measuring cups bought for use in its bakery rather than depreciate the cups' cost over their 10-year estimated useful life. Q1 Q2 Q3 Matching Going concern Q4 Q5 O