Match the explanations in column A to the concepts in column B by writing the correct letter next to the correct question number.

Here are the matches for the explanations in Column A to the concepts in Column B:

1. The financial statements of a business are prepared as if the business will continue trading in the foreseeable future.

   • This describes the Going concern concept, which assumes a business will continue to operate for an indefinite period.
   • 1. C

2. A business trading in MP3 players will show the value in the books at the cost price of R350 each, even if it is planning to sell each player at R600.

   • This illustrates the Prudence concept (conservatism), which dictates that assets and income should not be overstated. Valuing inventory at cost, even if the selling price is higher, avoids anticipating profits.
   • 2. E

3. If a business purchased a building three years ago at R600 000 and its worth R900 000 today, it will still be shown at the value of R600 000 in the business's statements.

   • This is an example of the Historical cost concept, where assets are recorded at their original purchase price.
   • 3. D

4. The telephone account at the end of February 2017 is still payable. This will be added to the Telephone account before closing it off to the Profit and Loss account.

   • This demonstrates the Matching concept, which requires expenses to be recognized in the same accounting period as the revenues they helped generate, regardless of when cash is paid.
   • 4. B

5. Consumable, postage and bank charges can all be posted to one account called Sundry expenses.

   • This applies the Concept of materiality, where items that are not individually significant can be grouped together.
   • 5. A

Here is the summary of the matches:

• 1. C
• 2. E
• 3. D
• 4. B
• 5. A