KAC $2200-$ INTERMEDIATE ACCOUNTING I$-$ ODEL Y$2$ S$1$ MAY$-$AUG $2025$ CAT $1-30$ MARKS INSTRUCTIONS: ANSWER ALL QUESTIONS TIME: $1$ HOUR QUESTION ONE $($a$)$ The Conceptual Framework for Financial Reporting outlines several key principles that guide the preparation of financial statements. Five such principles are: $-$ Accrual basis $-$ Neutrality $-$ Verifiability $-$ Timeliness $-$ Understandability Required: Briefly define each of the above principles. $(5$ marks$)($b$)$ These principles are especially relevant when recognizing and measuring expenses. Required: Using relevant examples, explain how each of the principles in $($a$)$ can be applied in accounting for operating expenses. $(5$ marks$)$ QUESTION TWO Below are inventory details for ZAWADI Traders for the month of April $2025$: Opening Inventory, April $1$: $300$ units @ Ksh$.380$ each Purchases: