Accounting and Finance I Assignment No.

1
Identify the concepts defining each statement given below: 1. The fact that a business is separate and distinguishable from its owner is best exemplified by this concept------------------2. Profit calculation is based on expenses incurred during the period rather than those paid. This statement effectively describes which concept ---------------. The management of !upiter "td is remar#ably incompetent$ but the firm%s accountants cannot ta#e into this into account when preparing the boo#s because of which concept& ------------------'. The research and development section of woodland "td$ however$ is doing so well that they anticipate a huge upturn in the sales next year. The accountants cannot increase the boo# value of the patents held though$ because of this concept-------------------(. If the firm believes that some of its debtors may default$ it should act on this by ma#ing sure that all possible losses are recorded in the boo#s. )hat accounting concept are we spea#ing of& -----------------*. +verything a firm owns$ it also owes to somebody. This co-incidence is explained by this concept ---------------------,. This concept states that if -say. the weighted average method of inventory valuation is used in one year$ then it should also be used next year: ------------/. If we receive an order for goods$ we would not include the value of it in our sales figures yet owing to this concept0convention. -------------------1. 2 firm may hold a certain stoc#$ which is heavily in demand. 3onse4uently$ the mar#et value of this stoc# may be increasing. The normal accounting procedure is to ignore this because of which concept& ---------------15. If the cashier buys a cash boo# in which to #eep his firm%s record$ he would not try to account for every single sheet of paper in the boo# because of this concept--------------------11. 2 business ma#es a loss for the second year running$ but a certain concept tells us that it will carry on trading unless we are notified to the contrary. )hich concept are we tal#ing about& ------------------------

12. The accounts of Parry "td. 6hows a profit of 7 //555 for the year. This includes an amount of 7 2(555 relating to profit from an order 8ust received. 9ased on this information$ fill the gaps: The real profit is 7 --------------- because we should apply the --------- concept. 1 . :s. Pinto is a fashion designer and runs a bouti4ue; during the year she had ta#en home some clothing fabric from her bouti4ue$ to present her friend a new suit for her birthday. 6he has included the cost of this stoc# -712555. as a business expenses. 9ased on this information fill the gap: The ------------concept applies here and the 712555 will be considered as --------------1'. <sing the same method of accounting over a considerable period is referred to as the --------- principle 1(. ------------ concept become relevant when sheth =hira8lal champa#lal =holi#aya $ the founder of :06 =holi#aya 9uilders "td$ dies and his son 6iddhart =holi#aya$ the elder son of sheth =hira8lal ta#es over the business . 1*. If an accountant overstates a business entities resources -or material assets. then we can state that he is violating the --------------principle of accounting 1,. >utsiders claims against the assets of an entity is called as ------------1/. ?@evenue is recogniAed when a sales transaction is made or when services is renderedB. =o you agree with this statement& !ustify you answer with reason and illustration.