Saffron Street Stores also runs the refreshment stall at Elmdale High School sports day. Complete the table by identifying the accounting concept the bookke...

Each situation is settled by asking which rule limits the bookkeeper's freedom of choice: how cautiously an amount is measured, whether the same method is kept from year to year, whose transactions belong in the records, what can be recorded at all, and which period an amount belongs to.

Why each row is treated that way:

1. Taking the lower of cost and net realisable value recognises at once a loss on drinks that will have to be sold cheaply, while no profit is taken until the drinks are actually sold. That caution is prudence.
2. Keeping the same depreciation method for the chiller from year to year makes the results comparable across periods. Changing it would alter the profit without anything real having changed, which is what consistency prevents.
3. The owner's private car is not used by the stall, so it is not an asset of the business. The business entity concept treats the business as separate from its owner even though a sole trader is not legally separate.
4. Reputation cannot be measured reliably in money, so money measurement keeps it out of the accounts even though it clearly has value to the stall.
5. The December rent relates to premises occupied in December, so it is matched against that month's revenue whatever the date on the invoice. The unpaid amount is shown as an accrued expense at the year end.

Prudence and consistency are the pair most often swapped. Prudence governs how cautiously an amount is measured; consistency governs whether the same basis is used from one year to the next.

Total .