Select 1) whether you agree or disagree with the action taken as described in the scenario and 2) the most fitting reason why you agree or disagree.

Carol Co. purchased equipment for $10,000 cash and records the expenditure as equipment expense. The expected useful life of the equipment is 5 years.

1)

a. I agree

b. I disagree

2)

Neutrality

Relevance

Faithful representation

Expense recognition principle

Revenue recognition principle

Periodicity

Monetary unit

Verifiability

Full disclosure

Going concern

Comparability

Timeliness

Understandability

Conservatism

Economic entity

Consistency

Historical cost