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A businessman purchased goods for Rs.25,00,000 and sold 80% of such goods during the accounting year ended 31st March, 2005. The market value of the remaining goods was Rs.4,00,000. He valued the closing stock at cost. He violated the concept of
- a)Money measurement.
- b)Conservatism.
- c)Cost.
- d)Periodicity.
Correct answer is option 'B'. Can you explain this answer?
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Verified Answer
A businessman purchased goods for Rs.25,00,000 and sold 80% of such go...
The conservatism principle is the general concept of recognizing expenses and liabilities as soon as possible when there is uncertainty about the outcome, but to only recognize revenues and assets when they are assured of being received.
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A businessman purchased goods for Rs.25,00,000 and sold 80% of such go...
The concept of conservatism in accounting states that while recording transactions, one should be cautious and not overstate the assets or income and understate the liabilities or expenses. It is better to recognize losses immediately, rather than recognizing profits that may or may not materialize in the future.
In the given scenario, the businessman violated the concept of conservatism by valuing the closing stock at cost, even though the market value of the remaining goods was Rs.4,00,000. This means that he did not consider the possibility of a decline in the market value of the remaining goods, which could result in a loss if he decides to sell them later.
Therefore, the correct answer is option B - conservatism.
In the given scenario, the businessman violated the concept of conservatism by valuing the closing stock at cost, even though the market value of the remaining goods was Rs.4,00,000. This means that he did not consider the possibility of a decline in the market value of the remaining goods, which could result in a loss if he decides to sell them later.
Therefore, the correct answer is option B - conservatism.
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A businessman purchased goods for Rs.25,00,000 and sold 80% of such go...
Because acc to conservatism principle asset are recorded at market price or cost price whichever is less
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A businessman purchased goods for Rs.25,00,000 and sold 80% of such goods during the accounting year ended 31st March, 2005. The market value of the remaining goods was Rs.4,00,000. He valued the closing stock at cost. He violated the concept ofa)Money measurement.b)Conservatism.c)Cost.d)Periodicity.Correct answer is option 'B'. Can you explain this answer?
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A businessman purchased goods for Rs.25,00,000 and sold 80% of such goods during the accounting year ended 31st March, 2005. The market value of the remaining goods was Rs.4,00,000. He valued the closing stock at cost. He violated the concept ofa)Money measurement.b)Conservatism.c)Cost.d)Periodicity.Correct 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 80% of such goods during the accounting year ended 31st March, 2005. The market value of the remaining goods was Rs.4,00,000. He valued the closing stock at cost. He violated the concept ofa)Money measurement.b)Conservatism.c)Cost.d)Periodicity.Correct 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 80% of such goods during the accounting year ended 31st March, 2005. The market value of the remaining goods was Rs.4,00,000. He valued the closing stock at cost. He violated the concept ofa)Money measurement.b)Conservatism.c)Cost.d)Periodicity.Correct answer is option 'B'. Can you explain this answer?.
A businessman purchased goods for Rs.25,00,000 and sold 80% of such goods during the accounting year ended 31st March, 2005. The market value of the remaining goods was Rs.4,00,000. He valued the closing stock at cost. He violated the concept ofa)Money measurement.b)Conservatism.c)Cost.d)Periodicity.Correct 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 80% of such goods during the accounting year ended 31st March, 2005. The market value of the remaining goods was Rs.4,00,000. He valued the closing stock at cost. He violated the concept ofa)Money measurement.b)Conservatism.c)Cost.d)Periodicity.Correct 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 80% of such goods during the accounting year ended 31st March, 2005. The market value of the remaining goods was Rs.4,00,000. He valued the closing stock at cost. He violated the concept ofa)Money measurement.b)Conservatism.c)Cost.d)Periodicity.Correct answer is option 'B'. Can you explain this answer?.
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