Q2. In each independent situation, identify the assumption or principle that is applicable and explain the rationale behind your choice.: (10 marks)

1. A company records the products it sells in its retail outlets for the purchase price of Rs 2,00,000 even though the suggested retail price was Rs 2,45,000.
2. Ajax Ltd receives Rs 50,000 for a service to be performed but only records Rs25,000 as Service revenue because it only earns half in the current period.
3. Byjuly Ltd Pays Rs 7,000 for insurance but uses only Rs 5,000 during the period. Therefore, it records only Rs 5,000 as Insurance Expense.
4. Miranda Furniture has been in business for 40 years. All of its operations are profitable and the accountants believe that the company will operate into foreseeable future

Anna Bread, owner of Bilateral Bookstores, informs her accountant that she does not want to review any accounting issue that is smaller than 1% of net income