Identify the accounting assumption, principle, or constraint that best describes the accounting practices at Steve Hill Company.

1. Financial statements are prepared each year.

2. Market value changes after an asset’s purchase are not recorded in the accounts.

3. Notes and supplementary information are included with the financial statements.

4. The factory is not reported at liquidation value. (Do not use the cost principle.)

5. Manufactured toys are not recorded as revenues until they have been sold and shipped.

6. Requires that generally accepted accounting principles be followed for all material items.