Answer
(a) Cost principle
(b) Separate entity assumption
(c) Time period assumption
Work Step by Step
(a) The cost principle dictates that assets should be recognized and remeasured at cost in the financial statements. Moreover, inventory should be reported at lower of cost or market value. In this case, inventory was reported at market value which is higher than its cost. Therefore, the recognition principle has been violated.
(b) Separate entity assumption states that transactions of business owners should be kept separate from company's transactions. Therefore, truck purchased for personal use cannot be charged to business expense.
(c) Financial statements should be prepared at regular intervals. Therefore, adding two weeks violates the time period assumption.
