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A businessman purchased goods for Rs. 25,00,000 and sold 70% of such goods during the accounting year ended 31stMarch, 2005. The market value of remaining goods was Rs. 5,00,000. He valued the Closing stock at Rs. 5,00,000 and not at Rs. 7,50,000 due to :
  • a)
    Money measurement
  • b)
    Conservatism
  • c)
    Cost
  • d)
    Periodicity
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
A businessman purchased goods for Rs. 25,00,000 and sold 70% of such g...
The right answer is CONSERVATISM because, The application of principle of conservatism says that we have to value the closing stock at cost or market value(NRV) WHICHEVER is LESS.

In the above case the cost of remaining goods is 750000 and the market value is 500000 therefore the cost value is ignored and the market value (500000)is taken into consideration.
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A businessman purchased goods for Rs. 25,00,000 and sold 70% of such goods during the accounting year ended 31stMarch, 2005. The market value of remaining goods was Rs. 5,00,000. He valued the Closing stock at Rs. 5,00,000 and not at Rs. 7,50,000 due to :a)Money measurementb)Conservatismc)Costd)PeriodicityCorrect answer is option 'B'. Can you explain this answer?
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A businessman purchased goods for Rs. 25,00,000 and sold 70% of such goods during the accounting year ended 31stMarch, 2005. The market value of remaining goods was Rs. 5,00,000. He valued the Closing stock at Rs. 5,00,000 and not at Rs. 7,50,000 due to :a)Money measurementb)Conservatismc)Costd)PeriodicityCorrect answer is option 'B'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A businessman purchased goods for Rs. 25,00,000 and sold 70% of such goods during the accounting year ended 31stMarch, 2005. The market value of remaining goods was Rs. 5,00,000. He valued the Closing stock at Rs. 5,00,000 and not at Rs. 7,50,000 due to :a)Money measurementb)Conservatismc)Costd)PeriodicityCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A businessman purchased goods for Rs. 25,00,000 and sold 70% of such goods during the accounting year ended 31stMarch, 2005. The market value of remaining goods was Rs. 5,00,000. He valued the Closing stock at Rs. 5,00,000 and not at Rs. 7,50,000 due to :a)Money measurementb)Conservatismc)Costd)PeriodicityCorrect answer is option 'B'. Can you explain this answer?.
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