(i) Define in your own words the terms ‘entity concept’ and ‘cost principle’. (ii) Rose runs a flower arranging business from her home. She uses the study as her office but it is also used by the rest of the household on occasion for homework and household accounts. She undertook the followin g transactions:

(a) purchased flowers from wholesalers

(b) paid water bill for the house

(c) purchased van used mainly for delivery but occasionally for private use

(d) purchase special shrubs (and used plants from the garden) to provide greenery for the arrangements she sells

(e) signed a two-year contract with a local building society to supply floral arrangements for their offices

(f) sent one of her arrangements to a personal friend as a birthday present Required Which of the transactions should form part of the AIS and which not? Give your reasons.