IHT 32U Y.IMO 2 Part II: Using the accounting identity (9 points) Use the following information to determine the missing amounts. $597,000 73,000 Assets 1/1/17 Common Stock 11/17 Common Stock 12/31/17 Assets 12/31/17 Liabilities 12/31/17 Expenses $1,955,000 Retained Earnings 1/1/17 ?2? Dividends 2017 683,000 Revenues 2017 2,157,000 Liabilities 1/1/17 750,000 725,000 Retained Earnings 12/31/17 700,000 Part III: Assumptions, Principles and Constraints (10 points) Answer the following using COMPLETE SENTENCES and proper grammar. If you know what you're talking about each answer should warrant no more than 3-4 sentences. Do not number your responses. I have simply included this to make sure you answer cach part of the question. (1) Describe the primary difference between cash basis and accrual basis accounting. (2) Identify the two primary principles/assumptions/constraints that allow for accrual basis accounting k 2. is that accounting depreciation measures the A common misconception of deterioration in the value of an asset. (1) Identify the principle/assumption/constraint that necessitates the application of depreciation, (2) define it as completely as possible and (3) apply it by describing how the process of depreciation fits the definition. A fellow staff auditor comments, "We don't need to make any record of that transaction because it does not amount to more than 5% of net assets. We can totally ignore it," There are two misconceptions in this statement. (1) What principle/assumption/constraint is your colleague referring to? (2) Provide a short description of how he or she has misconstrued the concept. 3