I need some help with questions from acounting here there are , i dont understand them:
1) Explain how the application of thr Entity and Reporting period principles ensures Relevance in the Accounting reports.
2) Explain how the apllication of the Historical cost principle ensures Reliability in the Accounting reports.
Ezxercise 1.3 Accounting principles
Michaels business is his band -Inside Out-which provides function music.In each of the following situations, identify and explain which Accounting principle has been breached
a) Michael bought his mum a new computer for her home using cash from the business cheque account.
b) Michael thinks that the band (the business)might disband in a year, so therefore has decided to wait until then to calculate profit.
c) Musical instruments that were bought six years ago are valued in the firms Balance Sheet at what the business is likely to receive if they were sold today.
d) After the band toured Japan, Michael decided to record the earnings in Japanese yen.
e) Michael changes accounting methods every year in order to make the profit appear as big as possible.
f) Michael has decided to list all the liabilities of the firm as current, despite a loan that is due in three years.
Please answer in a simple manner the questions.
1) Explain how the application of thr Entity and Reporting period principles ensures Relevance in the Accounting reports.
2) Explain how the apllication of the Historical cost principle ensures Reliability in the Accounting reports.
Ezxercise 1.3 Accounting principles
Michaels business is his band -Inside Out-which provides function music.In each of the following situations, identify and explain which Accounting principle has been breached
a) Michael bought his mum a new computer for her home using cash from the business cheque account.
b) Michael thinks that the band (the business)might disband in a year, so therefore has decided to wait until then to calculate profit.
c) Musical instruments that were bought six years ago are valued in the firms Balance Sheet at what the business is likely to receive if they were sold today.
d) After the band toured Japan, Michael decided to record the earnings in Japanese yen.
e) Michael changes accounting methods every year in order to make the profit appear as big as possible.
f) Michael has decided to list all the liabilities of the firm as current, despite a loan that is due in three years.
Please answer in a simple manner the questions.