) State & explain the principles of accounting on which each of the treatments described below are based. ( explain the principle first and relate it with the scenario)

1. Calibre or quality of management is not disclosed on the balance sheet.
2. Debentures are marked at the same amount in the shillings which the company borrowed though the purchasing power of many may have substantially changed.
3. Advance received from a customer is not taken as income or sales.
4. Rent paid for that portion of the premises utilized by the owner of the business for his personal use is reduction of owners equity.

Costs of advertising campaign are charged as expense in the period in which they are incurred.