[!) Explain the meaning and significance of the revenue realization principle.(4 marks) (b) Briefly explain whether revenue may be recognized in the following circumstances in mespect of sales made by : business entity (@) Goods have acquired by the business entity which it confidently expects to newell very quickly (2 mocks) () A customer places : firm order for goods (1 monks) [mi Goods are delivered to the customer's premives (1 marky) (iv) The customer's cheque in payment for the goods has been cleared by the bank. 2mok) (c) The vid belance of 5. Jemma, a sole trader, did not balance on 30 April 2005. The difference ww put in the suspense account. The final accounts, which were them prepared, showed a net profit of 5h. 64, 000. During audit the following errors were noted: (1) A loan from ABD Bunk of Sh. 10,000 was entered correctly in cashbook but was not posted to the ledger. (2)A cheque of 56.4,000 for ment received was not entered in the books. (3)Closing stock was overvalued by Sh.1, 500. (4)Discount allowed of Sh.500 wes entered in the discount received account (5) The opening stock wes understated by 5h 3 200. (6 Prepaid insurance of 51 220 had been included in the profit and loss account. (7) Goods destroyed by fire amounting to Sh. 12,000 were written off in the profit and loss account. Howrever the insurance company has agreed to compensate the full amount