3.1 You have heard the following statements made. Comment critically on them.

(a) ‘Equity only increases or decreases as a result of the owners putting more cash into the business or taking some out.’

(b) ‘An accrued expense is one that relates to next year.’

(c) ‘Unless we depreciate this asset we shall be unable to provide for its replacement.’

(d) ‘There is no point in depreciating the factory building. It is appreciating in value each year.’