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.

Sam Co. is a newly incorporated company. It chooses inventory cost flow assumptions that are most commonly chosen by firms in the same industry.

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