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Unformatted text preview: c) Consistency in this case because the same accounting principles would be used in this case d) CPAs audit report is definitely recognized in this case because a different method of valuating inventory is used. BE2-3 a) retained earnings : Revenues b) sales: distribution to owners c) additional paid in capital: Comprehensive income d) inventory: Assets e) depreciation: Assets f) loss on sale of equipment: Losses g) interest payable: Equity h) dividends: Liabilities i) gain on sale of investment: Gains j) issuance of common stock: Investment by owners BE2-7 a) industry practices b) conservatism c) materiality d) cost-benefit relationship...
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