Wendy Craven is the sole shareholder of a property management company near the campus of Pensacola Junior College. The business has cash of \($6,000\) and furniture that cost \($12,000\) and has a market value of \($16,000.\) Debts include accounts payable of \($5,000.\) Wendy’s personal home is valued at \($350,000\) and her personal bank account has \($9,000.

Requirements 

1.\) Consider the accounting principles discussed in the chapter and define the principle that best matches the situation:

a. Wendy’s personal assets are not recorded on the property management company’s balance sheet.

b. Wendy records furniture at its cost of \($12,000,\) not its market value of \($16,000.

c.\) Wendy does not make adjustments for inflation.

d. The account payable of \($5,000\) is documented by a statement from the furni¬ ture company showing the business still owes \($5,000\) on the furniture. Wendy’s friend thinks she should only owe about \($4,000.\) The account payable is recorded at \($5,000\).

2. How much equity is in the business?