Complete the following worksheet: The fact that a business is separate and distinguishable from its owner is best exemplified by the ___________ concept.

A customer has filed a suit against a trader who has supplied poor quality goods to him. It is known that the court judgment will be in favour of the customer and the trader will be required to pay the damages. However, the amount of legal damages is not known with certainity. The accounting year has already been ended and the books are now finalised to ascertain true profit or loss. The accountant of the trader has advised him not to consider the expected loss on account of payment of legal damages because the amount is not certain and the final judgment of the court is not yet out. Do you think the accountant is right in his approach.

What is matching concept? Why should a business concern follow this concept? Discuss.

Revenue is generally recongnised at the point of sale denotes the concept of _______________.

Complete the following worksheet: The management of a firm is remarkably incompetent, but the firms accountants can not take this into account while preparing book of accounts because of ___________ concept.

The realisation concept determines when goods sent on credit to customers are to be included in the sales figure for the purpose of computing the profit or loss for the accounting period. Which of the following tends to be used in practice to determine when to include a transaction in the sales figure for the period. When the goods have been: Give reasons for your answer.

Ruchica’s father is the sole proprietor of ‘Friends Gifts’, a firm engaged in the sale of gift items. In the process of preparing financial statements, the accountant of the firm Mr. Goyal fell ill and had to proceed on leave. Ruchica’s father was urgently in need of the statements as these had to be submitted to the bank, in pursuance of a loan of ` 5 lakh applied for the expansion of the business of the firm. Ruchica who is studying Accounting in her school, volunteered to complete the work. On scrutinising the accounts, the banker found that the value of building bought a few years back for ` 7 lakh has been shown in the books at ` 20 lakh, which is its present market value. Similarly, as compared to the last year, the method of valuation of stock was changed, resulting in value of goods to be about 15 per cent higher. Also, the whole amount of ` 70,000 spent on purchase of personal computer (expected life 5 years) during the year had been charged to the profits of the current year. The banker did not rely on the financial data provided by Ruchica. Advise Ruchica for the mistakes committed by her in the preparation of financial statements in the context of basic concepts in accounting.

Fill in the correct word: Recognition of expenses in the same period as associated revenues is called _______________concept.

‘The accounting concepts and accounting standards are generally referred to as the essence of financial accounting’. Comment.

Complete the following worksheet: If a firm believes that some of its debtors may ‘default’, it should act on this by making sure that all possible losses are recorded in the books. This is an example of the ___________ concept.

Complete the following worksheet: If a firm believes that some of its debtors may ‘default’, it should act on this by making sure that all possible losses are recorded in the books. This is an example of the ___________ concept.

Why is it necessary for accountants to assume that business entity will remain a going concern?

Complete the following worksheet: If a firm receives an order for goods, it would not be included in the sales figure owing to the __________.

Fill in the correct word: The accounting concept that refers to the tendency of accountants to resolve uncertainty and doubt in favour of understating assets and revenues and overstating liabilities and expenses is known as _______________.

The_______________concept requires that accounting transaction should be free from the bias of accountants and others.

When information about two different enterprises have been prepared presented in a similar manner the information exhibits the characteristic of:

Why is it important to adopt a consistent basis for the preparation of financial statements? Explain.

Complete the following worksheet: The fact that a business is separate and distinguishable from its owner is best exemplified by the ___________ concept.

Complete the following worksheet: A firm may hold stock which is heavily in demand. Consequently, the market value of this stock may be increased. Normal accounting procedure is to ignore this because of the __________.

Why is it important to adopt a consistent basis for the preparation of financial statements? Explain.