The following transactions occurred at the Lane Health Plan:
Transaction 1 — Lane recorded a $25,000 premium prior to receiving the payment
Transaction 2 — Lane purchased $500 in office expenses on account, but did not record the expense until it received the bill a month later
Transaction 3 — Fire destroyed one of Lane’s facilities; Lane waited until the facility was rebuilt before assessing and recording the amount of loss
Transaction 4 — Lane sold an investment on which it realized a $14,000 gain; Lane recorded the gain only after the sale was completed.
Of these transactions, the one that is consistent with the accounting principle of conservatism is: