Nina and Nita are joint owners of Classic Carpets. The business started its operation in January 2019. The business sells various types of carpet and rugs to the general public. Among the types of carpets and rugs available in their business are cut pile carpet, cut and loop carpet, loop pile carpet and patterned loop carpet. They also provide carpet installation service at customers place and carpet cleaning service. The business transactions were done both under the credit and cash transactions between the suppliers and customers.

The business was started with RM50,000 cash from Nina and RM150,000 worth of business premise from Nita. They also took loan from bank amounting RM100,000. They assume the business will continue to operate for a foreseeable future. During the year ended 31 December 2019, the business has the following information:

RM Motor vehicles 40,000 Accounts payable 20,000 Inventory 30,000 Bank 74,000 Water and electricity 15,000 Interest on bank loan 2,000

Required:

a. i. Identify any two (2) relevant accounting concept related to the business.

(2 mark)

ii. Explain briefly the accounting concepts you have identified in (i) above.

(3 marks)