Commerce Exam > Commerce Questions > Read the following hypothetical Case Study a...
Start Learning for Free
Read the following hypothetical Case Study and answer the given questions:
A business purchased goods for ₹2,00,000 and sold 75% of such goods during accounting year ended 31st March, 2020. The market value of remaining goods was ₹43,000. Accountant valued closing stock at cost. According to him,
(i) Owner of the business is treated as creditor to the extent of his capital;
(ii) All expenses incurred to earn revenue of a particular period should be charged against that revenue to determine the net income.
Financial statements are prepared on 31st March ever year.
Under which concept, owner of the business is treated as creditor to the extent of his capital.
- a)Conservatism
- b)Business entity
- c)Accounting period
- d)Matching
Correct answer is option 'B'. Can you explain this answer?
| FREE This question is part of | Download PDF Attempt this Test |
Verified Answer
Read the following hypothetical Case Study and answer the given quest...
According to Business Entity Concept, a business is treated as a separate entity and is distinct from it's owners. When a proprietor introduces capital in his own business, the capital is considered as liability from business point of view. Similarly, when he withdraws any money for personal use it is treated as reduction in the liability of business.
View all questions of this test
Most Upvoted Answer
Read the following hypothetical Case Study and answer the given quest...
Explanation:
Business Entity Concept:
Under this concept, the business is considered as a separate entity from its owners. It means that the transactions of the business are recorded separately from the personal transactions of the owner. This concept ensures that the financial statements of the business reflect only the financial transactions of the business and not the personal transactions of the owner.
Creditor Concept:
According to this concept, the owner of the business is treated as a creditor to the extent of his capital. It means that the owner has invested money in the business and is entitled to receive it back. The owner is treated as a creditor because he has given money to the business and is waiting to receive it back.
Accounting Period Concept:
Under this concept, the financial statements of the business are prepared for a specific period of time, usually a year. It means that the financial transactions of the business are recorded and reported for a specific period of time, and the financial statements reflect the financial position of the business at the end of that period.
Matching Concept:
According to this concept, all expenses incurred to earn revenue of a particular period should be charged against that revenue to determine the net income. It means that the expenses and revenues should be matched for a particular period of time, usually a year. This concept ensures that the expenses are recognized in the same period as the revenue they helped to generate.
Conclusion:
In the given case study, the owner of the business is treated as a creditor to the extent of his capital under the Business Entity Concept. The accountant valued the closing stock at cost, which is in accordance with the Matching Concept. The financial statements are prepared on 31st March every year, which is in accordance with the Accounting Period Concept.
Business Entity Concept:
Under this concept, the business is considered as a separate entity from its owners. It means that the transactions of the business are recorded separately from the personal transactions of the owner. This concept ensures that the financial statements of the business reflect only the financial transactions of the business and not the personal transactions of the owner.
Creditor Concept:
According to this concept, the owner of the business is treated as a creditor to the extent of his capital. It means that the owner has invested money in the business and is entitled to receive it back. The owner is treated as a creditor because he has given money to the business and is waiting to receive it back.
Accounting Period Concept:
Under this concept, the financial statements of the business are prepared for a specific period of time, usually a year. It means that the financial transactions of the business are recorded and reported for a specific period of time, and the financial statements reflect the financial position of the business at the end of that period.
Matching Concept:
According to this concept, all expenses incurred to earn revenue of a particular period should be charged against that revenue to determine the net income. It means that the expenses and revenues should be matched for a particular period of time, usually a year. This concept ensures that the expenses are recognized in the same period as the revenue they helped to generate.
Conclusion:
In the given case study, the owner of the business is treated as a creditor to the extent of his capital under the Business Entity Concept. The accountant valued the closing stock at cost, which is in accordance with the Matching Concept. The financial statements are prepared on 31st March every year, which is in accordance with the Accounting Period Concept.
Attention Commerce Students!
To make sure you are not studying endlessly, EduRev has designed Commerce study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in Commerce.
|
Explore Courses for Commerce exam
|
|
Similar Commerce Doubts
Top Courses for CommerceView all
Read the following hypothetical Case Study and answer the given questions:A business purchased goods for ₹2,00,000 and sold 75% of such goods during accounting year ended 31st March, 2020. The market value of remaining goods was ₹43,000. Accountant valued closing stock at cost. According to him,(i) Owner of the business is treated as creditor to the extent of his capital;(ii) All expenses incurred to earn revenue of a particular period should be charged against that revenue to determine the net income.Financial statements are prepared on 31st March ever year.Under which concept, owner of the business is treated as creditor to the extent of his capital.a)Conservatismb)Business entityc)Accounting periodd)MatchingCorrect answer is option 'B'. Can you explain this answer?
Question Description
Read the following hypothetical Case Study and answer the given questions:A business purchased goods for ₹2,00,000 and sold 75% of such goods during accounting year ended 31st March, 2020. The market value of remaining goods was ₹43,000. Accountant valued closing stock at cost. According to him,(i) Owner of the business is treated as creditor to the extent of his capital;(ii) All expenses incurred to earn revenue of a particular period should be charged against that revenue to determine the net income.Financial statements are prepared on 31st March ever year.Under which concept, owner of the business is treated as creditor to the extent of his capital.a)Conservatismb)Business entityc)Accounting periodd)MatchingCorrect answer is option 'B'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Read the following hypothetical Case Study and answer the given questions:A business purchased goods for ₹2,00,000 and sold 75% of such goods during accounting year ended 31st March, 2020. The market value of remaining goods was ₹43,000. Accountant valued closing stock at cost. According to him,(i) Owner of the business is treated as creditor to the extent of his capital;(ii) All expenses incurred to earn revenue of a particular period should be charged against that revenue to determine the net income.Financial statements are prepared on 31st March ever year.Under which concept, owner of the business is treated as creditor to the extent of his capital.a)Conservatismb)Business entityc)Accounting periodd)MatchingCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Read the following hypothetical Case Study and answer the given questions:A business purchased goods for ₹2,00,000 and sold 75% of such goods during accounting year ended 31st March, 2020. The market value of remaining goods was ₹43,000. Accountant valued closing stock at cost. According to him,(i) Owner of the business is treated as creditor to the extent of his capital;(ii) All expenses incurred to earn revenue of a particular period should be charged against that revenue to determine the net income.Financial statements are prepared on 31st March ever year.Under which concept, owner of the business is treated as creditor to the extent of his capital.a)Conservatismb)Business entityc)Accounting periodd)MatchingCorrect answer is option 'B'. Can you explain this answer?.
Read the following hypothetical Case Study and answer the given questions:A business purchased goods for ₹2,00,000 and sold 75% of such goods during accounting year ended 31st March, 2020. The market value of remaining goods was ₹43,000. Accountant valued closing stock at cost. According to him,(i) Owner of the business is treated as creditor to the extent of his capital;(ii) All expenses incurred to earn revenue of a particular period should be charged against that revenue to determine the net income.Financial statements are prepared on 31st March ever year.Under which concept, owner of the business is treated as creditor to the extent of his capital.a)Conservatismb)Business entityc)Accounting periodd)MatchingCorrect answer is option 'B'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Read the following hypothetical Case Study and answer the given questions:A business purchased goods for ₹2,00,000 and sold 75% of such goods during accounting year ended 31st March, 2020. The market value of remaining goods was ₹43,000. Accountant valued closing stock at cost. According to him,(i) Owner of the business is treated as creditor to the extent of his capital;(ii) All expenses incurred to earn revenue of a particular period should be charged against that revenue to determine the net income.Financial statements are prepared on 31st March ever year.Under which concept, owner of the business is treated as creditor to the extent of his capital.a)Conservatismb)Business entityc)Accounting periodd)MatchingCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Read the following hypothetical Case Study and answer the given questions:A business purchased goods for ₹2,00,000 and sold 75% of such goods during accounting year ended 31st March, 2020. The market value of remaining goods was ₹43,000. Accountant valued closing stock at cost. According to him,(i) Owner of the business is treated as creditor to the extent of his capital;(ii) All expenses incurred to earn revenue of a particular period should be charged against that revenue to determine the net income.Financial statements are prepared on 31st March ever year.Under which concept, owner of the business is treated as creditor to the extent of his capital.a)Conservatismb)Business entityc)Accounting periodd)MatchingCorrect answer is option 'B'. Can you explain this answer?.
Solutions for Read the following hypothetical Case Study and answer the given questions:A business purchased goods for ₹2,00,000 and sold 75% of such goods during accounting year ended 31st March, 2020. The market value of remaining goods was ₹43,000. Accountant valued closing stock at cost. According to him,(i) Owner of the business is treated as creditor to the extent of his capital;(ii) All expenses incurred to earn revenue of a particular period should be charged against that revenue to determine the net income.Financial statements are prepared on 31st March ever year.Under which concept, owner of the business is treated as creditor to the extent of his capital.a)Conservatismb)Business entityc)Accounting periodd)MatchingCorrect answer is option 'B'. Can you explain this answer? in English & in Hindi are available as part of our courses for Commerce.
Download more important topics, notes, lectures and mock test series for Commerce Exam by signing up for free.
Here you can find the meaning of Read the following hypothetical Case Study and answer the given questions:A business purchased goods for ₹2,00,000 and sold 75% of such goods during accounting year ended 31st March, 2020. The market value of remaining goods was ₹43,000. Accountant valued closing stock at cost. According to him,(i) Owner of the business is treated as creditor to the extent of his capital;(ii) All expenses incurred to earn revenue of a particular period should be charged against that revenue to determine the net income.Financial statements are prepared on 31st March ever year.Under which concept, owner of the business is treated as creditor to the extent of his capital.a)Conservatismb)Business entityc)Accounting periodd)MatchingCorrect answer is option 'B'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
Read the following hypothetical Case Study and answer the given questions:A business purchased goods for ₹2,00,000 and sold 75% of such goods during accounting year ended 31st March, 2020. The market value of remaining goods was ₹43,000. Accountant valued closing stock at cost. According to him,(i) Owner of the business is treated as creditor to the extent of his capital;(ii) All expenses incurred to earn revenue of a particular period should be charged against that revenue to determine the net income.Financial statements are prepared on 31st March ever year.Under which concept, owner of the business is treated as creditor to the extent of his capital.a)Conservatismb)Business entityc)Accounting periodd)MatchingCorrect answer is option 'B'. Can you explain this answer?, a detailed solution for Read the following hypothetical Case Study and answer the given questions:A business purchased goods for ₹2,00,000 and sold 75% of such goods during accounting year ended 31st March, 2020. The market value of remaining goods was ₹43,000. Accountant valued closing stock at cost. According to him,(i) Owner of the business is treated as creditor to the extent of his capital;(ii) All expenses incurred to earn revenue of a particular period should be charged against that revenue to determine the net income.Financial statements are prepared on 31st March ever year.Under which concept, owner of the business is treated as creditor to the extent of his capital.a)Conservatismb)Business entityc)Accounting periodd)MatchingCorrect answer is option 'B'. Can you explain this answer? has been provided alongside types of Read the following hypothetical Case Study and answer the given questions:A business purchased goods for ₹2,00,000 and sold 75% of such goods during accounting year ended 31st March, 2020. The market value of remaining goods was ₹43,000. Accountant valued closing stock at cost. According to him,(i) Owner of the business is treated as creditor to the extent of his capital;(ii) All expenses incurred to earn revenue of a particular period should be charged against that revenue to determine the net income.Financial statements are prepared on 31st March ever year.Under which concept, owner of the business is treated as creditor to the extent of his capital.a)Conservatismb)Business entityc)Accounting periodd)MatchingCorrect answer is option 'B'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Read the following hypothetical Case Study and answer the given questions:A business purchased goods for ₹2,00,000 and sold 75% of such goods during accounting year ended 31st March, 2020. The market value of remaining goods was ₹43,000. Accountant valued closing stock at cost. According to him,(i) Owner of the business is treated as creditor to the extent of his capital;(ii) All expenses incurred to earn revenue of a particular period should be charged against that revenue to determine the net income.Financial statements are prepared on 31st March ever year.Under which concept, owner of the business is treated as creditor to the extent of his capital.a)Conservatismb)Business entityc)Accounting periodd)MatchingCorrect answer is option 'B'. Can you explain this answer? tests, examples and also practice Commerce tests.
|
|
Explore Courses for Commerce exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup