CA Foundation Exam > CA Foundation Questions > A proprietor, Mr. A has reported a profit of ...
Start Learning for Free
A proprietor, Mr. A has reported a profit of Rs. 1,25,000 at the end of the financial year after taking into consideration the following amount:
(i). The cost of an assets Rs. 25,000 has been taken as en expense.
(ii). Mr. A is anticipating a profit of Rs. 10,000 on the future sale of a car shown as an asset in his books.
(iii). Salary of Rs. 7,000 payable in the financial year has not been taken into account.
(iv). Mr. A purchased an asset for Rs. 75,000 but its fair value on the date of purchase was Rs. 85,000. Mr. A recorded the value of asset in his books by Rs. 85,000.
Q. Which concept should be followed in the statement (ii)?
(i). The cost of an assets Rs. 25,000 has been taken as en expense.
(ii). Mr. A is anticipating a profit of Rs. 10,000 on the future sale of a car shown as an asset in his books.
(iii). Salary of Rs. 7,000 payable in the financial year has not been taken into account.
(iv). Mr. A purchased an asset for Rs. 75,000 but its fair value on the date of purchase was Rs. 85,000. Mr. A recorded the value of asset in his books by Rs. 85,000.
Q. Which concept should be followed in the statement (ii)?
- a)Conservatism
- b)Materiality
- c)Historical cost
- d)Accrual
Correct answer is option 'A'. Can you explain this answer?
| FREE This question is part of | Download PDF Attempt this Test |
Most Upvoted Answer
A proprietor, Mr. A has reported a profit of Rs. 1,25,000 at the end o...
Concept of Conservatism
The concept of conservatism is one of the fundamental accounting principles that states that while recognizing profits, the accountants should always exercise caution and be conservative in their approach. This means that accountants should not overstate revenues or assets and should not understate expenses or liabilities. This concept is also known as the principle of prudence.
Application of Conservatism in Statement (ii)
In the given statement (ii), Mr. A is anticipating a profit of Rs. 10,000 on the future sale of a car shown as an asset in his books. Here, Mr. A is assuming a profit even though the sale has not yet taken place. This assumption may not be accurate, as the actual selling price of the car may be lower than the expected profit.
Therefore, to exercise caution and be conservative, the concept of conservatism should be followed in this case. The profit on the future sale of the car should not be recognized until the sale has actually taken place, and the actual profit can be determined. This will ensure that the profits are not overstated, and the financial statements provide a true and fair view of the financial position of the business.
Conclusion
In conclusion, the concept of conservatism is an important principle in accounting that helps in ensuring that the financial statements of a business provide a true and fair view of its financial position. It requires accountants to be cautious and conservative while recognizing profits, and to avoid overstating revenues or assets and understate expenses or liabilities. In the given statement (ii), the concept of conservatism should be followed to ensure that the profits are not overstated.
The concept of conservatism is one of the fundamental accounting principles that states that while recognizing profits, the accountants should always exercise caution and be conservative in their approach. This means that accountants should not overstate revenues or assets and should not understate expenses or liabilities. This concept is also known as the principle of prudence.
Application of Conservatism in Statement (ii)
In the given statement (ii), Mr. A is anticipating a profit of Rs. 10,000 on the future sale of a car shown as an asset in his books. Here, Mr. A is assuming a profit even though the sale has not yet taken place. This assumption may not be accurate, as the actual selling price of the car may be lower than the expected profit.
Therefore, to exercise caution and be conservative, the concept of conservatism should be followed in this case. The profit on the future sale of the car should not be recognized until the sale has actually taken place, and the actual profit can be determined. This will ensure that the profits are not overstated, and the financial statements provide a true and fair view of the financial position of the business.
Conclusion
In conclusion, the concept of conservatism is an important principle in accounting that helps in ensuring that the financial statements of a business provide a true and fair view of its financial position. It requires accountants to be cautious and conservative while recognizing profits, and to avoid overstating revenues or assets and understate expenses or liabilities. In the given statement (ii), the concept of conservatism should be followed to ensure that the profits are not overstated.
Free Test
FREE
| Start Free Test |
Community Answer
A proprietor, Mr. A has reported a profit of Rs. 1,25,000 at the end o...
Answer is A. because conservatism tells us anticipate no future profits but provide for all possible losses.
Attention CA Foundation Students!
To make sure you are not studying endlessly, EduRev has designed CA Foundation study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in CA Foundation.
|
Explore Courses for CA Foundation exam
|
|
Similar CA Foundation Doubts
Top Courses for CA FoundationView all
A proprietor, Mr. A has reported a profit of Rs. 1,25,000 at the end of the financial year after taking into consideration the following amount:(i). The cost of an assets Rs. 25,000 has been taken as en expense.(ii). Mr. A is anticipating a profit of Rs. 10,000 on the future sale of a car shown as an asset in his books.(iii). Salary of Rs. 7,000 payable in the financial year has not been taken into account.(iv). Mr. A purchased an asset for Rs. 75,000 but its fair value on the date of purchase was Rs. 85,000. Mr. A recorded the value of asset in his books by Rs. 85,000.Q. Which concept should be followed in the statement (ii)?a)Conservatismb)Materialityc)Historical costd)AccrualCorrect answer is option 'A'. Can you explain this answer?
Question Description
A proprietor, Mr. A has reported a profit of Rs. 1,25,000 at the end of the financial year after taking into consideration the following amount:(i). The cost of an assets Rs. 25,000 has been taken as en expense.(ii). Mr. A is anticipating a profit of Rs. 10,000 on the future sale of a car shown as an asset in his books.(iii). Salary of Rs. 7,000 payable in the financial year has not been taken into account.(iv). Mr. A purchased an asset for Rs. 75,000 but its fair value on the date of purchase was Rs. 85,000. Mr. A recorded the value of asset in his books by Rs. 85,000.Q. Which concept should be followed in the statement (ii)?a)Conservatismb)Materialityc)Historical costd)AccrualCorrect answer is option 'A'. 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 proprietor, Mr. A has reported a profit of Rs. 1,25,000 at the end of the financial year after taking into consideration the following amount:(i). The cost of an assets Rs. 25,000 has been taken as en expense.(ii). Mr. A is anticipating a profit of Rs. 10,000 on the future sale of a car shown as an asset in his books.(iii). Salary of Rs. 7,000 payable in the financial year has not been taken into account.(iv). Mr. A purchased an asset for Rs. 75,000 but its fair value on the date of purchase was Rs. 85,000. Mr. A recorded the value of asset in his books by Rs. 85,000.Q. Which concept should be followed in the statement (ii)?a)Conservatismb)Materialityc)Historical costd)AccrualCorrect answer is option 'A'. 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 proprietor, Mr. A has reported a profit of Rs. 1,25,000 at the end of the financial year after taking into consideration the following amount:(i). The cost of an assets Rs. 25,000 has been taken as en expense.(ii). Mr. A is anticipating a profit of Rs. 10,000 on the future sale of a car shown as an asset in his books.(iii). Salary of Rs. 7,000 payable in the financial year has not been taken into account.(iv). Mr. A purchased an asset for Rs. 75,000 but its fair value on the date of purchase was Rs. 85,000. Mr. A recorded the value of asset in his books by Rs. 85,000.Q. Which concept should be followed in the statement (ii)?a)Conservatismb)Materialityc)Historical costd)AccrualCorrect answer is option 'A'. Can you explain this answer?.
A proprietor, Mr. A has reported a profit of Rs. 1,25,000 at the end of the financial year after taking into consideration the following amount:(i). The cost of an assets Rs. 25,000 has been taken as en expense.(ii). Mr. A is anticipating a profit of Rs. 10,000 on the future sale of a car shown as an asset in his books.(iii). Salary of Rs. 7,000 payable in the financial year has not been taken into account.(iv). Mr. A purchased an asset for Rs. 75,000 but its fair value on the date of purchase was Rs. 85,000. Mr. A recorded the value of asset in his books by Rs. 85,000.Q. Which concept should be followed in the statement (ii)?a)Conservatismb)Materialityc)Historical costd)AccrualCorrect answer is option 'A'. 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 proprietor, Mr. A has reported a profit of Rs. 1,25,000 at the end of the financial year after taking into consideration the following amount:(i). The cost of an assets Rs. 25,000 has been taken as en expense.(ii). Mr. A is anticipating a profit of Rs. 10,000 on the future sale of a car shown as an asset in his books.(iii). Salary of Rs. 7,000 payable in the financial year has not been taken into account.(iv). Mr. A purchased an asset for Rs. 75,000 but its fair value on the date of purchase was Rs. 85,000. Mr. A recorded the value of asset in his books by Rs. 85,000.Q. Which concept should be followed in the statement (ii)?a)Conservatismb)Materialityc)Historical costd)AccrualCorrect answer is option 'A'. 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 proprietor, Mr. A has reported a profit of Rs. 1,25,000 at the end of the financial year after taking into consideration the following amount:(i). The cost of an assets Rs. 25,000 has been taken as en expense.(ii). Mr. A is anticipating a profit of Rs. 10,000 on the future sale of a car shown as an asset in his books.(iii). Salary of Rs. 7,000 payable in the financial year has not been taken into account.(iv). Mr. A purchased an asset for Rs. 75,000 but its fair value on the date of purchase was Rs. 85,000. Mr. A recorded the value of asset in his books by Rs. 85,000.Q. Which concept should be followed in the statement (ii)?a)Conservatismb)Materialityc)Historical costd)AccrualCorrect answer is option 'A'. Can you explain this answer?.
Solutions for A proprietor, Mr. A has reported a profit of Rs. 1,25,000 at the end of the financial year after taking into consideration the following amount:(i). The cost of an assets Rs. 25,000 has been taken as en expense.(ii). Mr. A is anticipating a profit of Rs. 10,000 on the future sale of a car shown as an asset in his books.(iii). Salary of Rs. 7,000 payable in the financial year has not been taken into account.(iv). Mr. A purchased an asset for Rs. 75,000 but its fair value on the date of purchase was Rs. 85,000. Mr. A recorded the value of asset in his books by Rs. 85,000.Q. Which concept should be followed in the statement (ii)?a)Conservatismb)Materialityc)Historical costd)AccrualCorrect answer is option 'A'. Can you explain this answer? in English & in Hindi are available as part of our courses for CA Foundation.
Download more important topics, notes, lectures and mock test series for CA Foundation Exam by signing up for free.
Here you can find the meaning of A proprietor, Mr. A has reported a profit of Rs. 1,25,000 at the end of the financial year after taking into consideration the following amount:(i). The cost of an assets Rs. 25,000 has been taken as en expense.(ii). Mr. A is anticipating a profit of Rs. 10,000 on the future sale of a car shown as an asset in his books.(iii). Salary of Rs. 7,000 payable in the financial year has not been taken into account.(iv). Mr. A purchased an asset for Rs. 75,000 but its fair value on the date of purchase was Rs. 85,000. Mr. A recorded the value of asset in his books by Rs. 85,000.Q. Which concept should be followed in the statement (ii)?a)Conservatismb)Materialityc)Historical costd)AccrualCorrect answer is option 'A'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
A proprietor, Mr. A has reported a profit of Rs. 1,25,000 at the end of the financial year after taking into consideration the following amount:(i). The cost of an assets Rs. 25,000 has been taken as en expense.(ii). Mr. A is anticipating a profit of Rs. 10,000 on the future sale of a car shown as an asset in his books.(iii). Salary of Rs. 7,000 payable in the financial year has not been taken into account.(iv). Mr. A purchased an asset for Rs. 75,000 but its fair value on the date of purchase was Rs. 85,000. Mr. A recorded the value of asset in his books by Rs. 85,000.Q. Which concept should be followed in the statement (ii)?a)Conservatismb)Materialityc)Historical costd)AccrualCorrect answer is option 'A'. Can you explain this answer?, a detailed solution for A proprietor, Mr. A has reported a profit of Rs. 1,25,000 at the end of the financial year after taking into consideration the following amount:(i). The cost of an assets Rs. 25,000 has been taken as en expense.(ii). Mr. A is anticipating a profit of Rs. 10,000 on the future sale of a car shown as an asset in his books.(iii). Salary of Rs. 7,000 payable in the financial year has not been taken into account.(iv). Mr. A purchased an asset for Rs. 75,000 but its fair value on the date of purchase was Rs. 85,000. Mr. A recorded the value of asset in his books by Rs. 85,000.Q. Which concept should be followed in the statement (ii)?a)Conservatismb)Materialityc)Historical costd)AccrualCorrect answer is option 'A'. Can you explain this answer? has been provided alongside types of A proprietor, Mr. A has reported a profit of Rs. 1,25,000 at the end of the financial year after taking into consideration the following amount:(i). The cost of an assets Rs. 25,000 has been taken as en expense.(ii). Mr. A is anticipating a profit of Rs. 10,000 on the future sale of a car shown as an asset in his books.(iii). Salary of Rs. 7,000 payable in the financial year has not been taken into account.(iv). Mr. A purchased an asset for Rs. 75,000 but its fair value on the date of purchase was Rs. 85,000. Mr. A recorded the value of asset in his books by Rs. 85,000.Q. Which concept should be followed in the statement (ii)?a)Conservatismb)Materialityc)Historical costd)AccrualCorrect answer is option 'A'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice A proprietor, Mr. A has reported a profit of Rs. 1,25,000 at the end of the financial year after taking into consideration the following amount:(i). The cost of an assets Rs. 25,000 has been taken as en expense.(ii). Mr. A is anticipating a profit of Rs. 10,000 on the future sale of a car shown as an asset in his books.(iii). Salary of Rs. 7,000 payable in the financial year has not been taken into account.(iv). Mr. A purchased an asset for Rs. 75,000 but its fair value on the date of purchase was Rs. 85,000. Mr. A recorded the value of asset in his books by Rs. 85,000.Q. Which concept should be followed in the statement (ii)?a)Conservatismb)Materialityc)Historical costd)AccrualCorrect answer is option 'A'. Can you explain this answer? tests, examples and also practice CA Foundation tests.
|
|
Explore Courses for CA Foundation 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
|
Follow Us
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup