For each of the following cases, respond to the question asked and indicate the accounting principle or concept that applies.

1. Baxter Company charges off the cost of all magazine advertising in the year it is incurred even though the advertising probably results in some sales in later years. Why?

2. Arlington Company’s net income is about $1.5 million a year. Arlington charges to expense all property insurance premiums when paid. Last year approximately $4,800 of these premiums represented amounts applicable to future years. Is this proper? Why or why not?

3. Cortez Products Corporation charges all of its marketing costs to expense when incurred. Why?