Rawsons Recycling Ltd commenced business on 31 March 2019 in the recycling industry. The company balances its accounting records at month-end and the end of its reporting period is 31 December. All purchase prices include GST. The following events occurred during 2019 and 2020. 2019 April 1 June 30 Aug. 31 Dec. 31 Paid $154 000 cash for a second-hand disposal truck. Paid $1 650 cash to recondition the trucks engine. Paid $13 200 cash for equipment. The company estimated the equipments useful life at 10 years and residual value at $1 500. Paid $660 cash for the trucks transmission repairs and oil change. Recorded depreciation on the truck at 40% p.a. on the diminishing balance, and on the equipment using the straight-line method. 2020 March 13 July 1 Dec. 31 Paid $660 cash to replace a damaged bumper bar on the truck. Installed a new motor in the truck for a cost of $12 100. The company considered that the carrying amount of the old motor was only $600 at this date, and the old motor was written off. With the new motor installed, the trucks depreciation rate using the diminishing-balance method was revised to 30% from 1 July. Recorded depreciation on the truck and on the equipment.

Required Prepare journal entries to record the events.

Part B (7 marks) State and define the two different types of theories in accounting? Illustrate your answer with one example for each theory.