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Cpt accountancy


intermediate(ipc)course (no)     26 September 2011

intermediate(ipc)course
no 
 39 likes  1460 points

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a businessman purchased goods for Rs. 2500000 & sold 70% of such goods during the accounting year ended 31 st march,2005.the market value of remaining goods were Rs. 500000.he valued closing stock at Rs. 500000 & not at Rs. 750000 due to :

a).conservatism, b).realisable value,c).matching concept,d).prudence.

avater

GAUTAM DEY (Be Patient, Live Life)     26 September 2011

GAUTAM DEY
Be Patient Live Life 
 3515 likes  17289 points

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Ans- (a) Conservatism.

Conservatism states that the accountants should not anticipate income and should provide for all possible losses. The valuation of stock-in-trade at a "lower of cost or net realisable value" is the application of this principle.

Here, cost price is Rs 500000 and net realisable value(market value) is Rs 750000.

Applying the principle of Conservatism (i.e, lower of cost of net realisable value) the value of stock-in-trade is Rs 500000  

avater

Manas Bansal   01 May 2019

Manas Bansal

 4 points

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Provide some more applications of prudence concept


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