Q1: Accounting has its unique theory, as it is a type of social sciences; discuss this statement explaining the main principles and assumptions of accounting.Accounting is an important field of study, and it can be classified as a social science, which has its unique theory and principles. Accounting is responsible for the record-keeping and analysis of the economic activities of an organization. Accounting is based on the following principles:1. Business Entity: The concept of a business entity assumes that the company is distinct from its owners, and the financial statements should be prepared for the business entity rather than the owner.2. Historical Cost Principle: The historical cost principle assumes that all assets and liabilities should be recorded at their historical cost, which is the amount of cash or cash equivalents that was exchanged at the time of acquisition.3. Going Concern Assumption: The going concern assumption assumes that the company will continue its operations in the future, and there is no need to liquidate its assets.4. Monetary Unit Assumption: The monetary unit assumption assumes that all transactions should be recorded in a common currency, such as dollars or euros.5. Matching Principle: The matching principle assumes that expenses should be matched with revenues in the same accounting period to measure the profitability of the business. Q2: Accounting has its unique theory, as it is a type of social sciences; discuss this statement explaining the main principles and assumptions of accounting.Accounting is an important field of study, and it can be classified as a social science, which has its unique theory and principles. Accounting is responsible for the record-keeping and analysis of the economic activities of an organization. Accounting is based on the following principles:1. Business Entity: The concept of a business entity assumes that the company is distinct from its owners, and the financial statements should be prepared for the business entity rather than the owner.2. Historical Cost Principle: The historical cost principle assumes that all assets and liabilities should be recorded at their historical cost, which is the amount of cash or cash equivalents that was exchanged at the time of acquisition.3. Going Concern Assumption: The going concern assumption assumes that the company will continue its operations in the future, and there is no need to liquidate its assets.4. Monetary Unit Assumption: The monetary unit assumption assumes that all transactions should be recorded in a common currency, such as dollars or euros.5. Matching Principle: The matching principle assumes that expenses should be matched with revenues in the same accounting period to measure the profitability of the business. Q3: Ibrahim has a sole proprietorship working in goods merchandising and he needs to choose an inventory costing method. Being an accountant, list methods Ibrahim can use and explain to him advantages and disadvantages of each method supported by numerical examples.There are three primary inventory costing methods, namely FIFO, LIFO, and Average Cost Method.FIFO: The first-in, first-out method assumes that the goods that arrive first are sold first. As a result, the cost of the first units sold is assigned to cost of goods sold, whereas the cost of the units that remain in inventory is assigned to ending inventory. This approach is effective when prices are rising since the cost of the inventory sold is less than the cost of the inventory purchased most recently.LIFO: The last-in, first-out method assumes that the goods that arrive last are sold first. As a result, the cost of the last units sold is assigned to cost of goods sold, whereas the cost of the units that remain in inventory is assigned to ending inventory. This approach is effective when prices are falling since the cost of the inventory sold is more than the cost of the inventory purchased most recently.Average Cost Method: The average cost method assumes that the cost of each unit in inventory is the average of the costs of all the units in inventory. This method is effective when the prices of goods are relatively stable since it does not result in distortions in cost of goods sold or inventory.The following example illustrates the use of the three methods:Assuming the following information:FIFO: The cost of the first 5 units sold is $50, the cost of the next 4 units sold is $55, and the cost of the last 3 units sold is $60. The cost of the 8 units remaining in inventory is $60.LIFO: The cost of the first 5 units sold is $60, the cost of the next 4 units sold is $55, and the cost of the last 3 units sold is $50. The cost of the 8 units remaining in inventory is $50.Average Cost Method: The cost per unit is $56.88 ($511.5 / 9), and the cost of the 12 units sold is $682.56 ($56.88 x 12). The cost of the 1 unit remaining in inventory is $56.88.