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Suheel Ahmed (Querist)

04 June 2009
Name : Suheel-(CPT-Student)
Region : Mandya-(Bangalore)/karnataka
E-Mail : suheel.84@gmail.com

1. The concept of conservatism, when
applied to the Balance Sheet, results
in
a) Understatement of assets
b) Overstatement of assets
c) Overstatement of capital
d) Understatement of capital

2. The determinatin of expenses for an
accounting period is based on the
principle of
a) Objectivity b) Materiality
c) Matching d) Periodicity

3. All of the following are valuation
principles except
a) Historical cost b) Present value
c) Future value d) Realisable value

Sir,if you answer above questions with reason it will help of mine& cpt students for 28.06.09 cpt examination

Thanks,

Parveen Bansal

Parveen Bansal (Expert)

04 June 2009 The concept of conservatism is used, while estimating cost / revenue.

Cost of Rs. 100 is incurred means transaction has to be recorded at Rs. 100. It can not be recorded at Rs. 50. Conservatism principle has no role to play.

In case provision is to be made for tax liability, tax liability estimates should not be on lower side. It means conservatism principle has been applied.

Vipul J. Bhavsar

Vipul J. Bhavsar (Expert)

04 June 2009 The answers are as follows:

1)The concept of conservatism, when
applied to the Balance Sheet, results
in - a) Understatement of assets

2)The determination of expenses for an
accounting period is based on the
principle of - d) Periodicity

3. All of the following are valuation
principles except - a) Historical cost

I request all the experts to support or correct(if any) the answers.

Vipul J. Bhavsar

Vipul J. Bhavsar (Expert)