FIN621 GDB 1 Solution and Discussion

[Aqsa Farhat]

thank you please do before last date

[Aqsa Farhat]

@zaasmi is that solution of fin 621 gdb ?

[Aqsa Farhat]

tomorrow is the last date of fin 621 GDB Question Title Accounting Principles if anyone has solution kindly share with me

[zaasmi]

@zaasmi said in FIN621 GDB 1 Solution and Discussion:

ABC Company owns a photocopy shop, a food court and provides tax consultancy service. The financial statements of each business are prepared separately.

• Entity principle of Accounting
  The business mdity concept states that the transactions associated with a business most be separately recorded from those of its ommers or other businesses or we can say that under this concept, the entity must record all transactions separately from its owner or owner’s other business. Without this concept the records of multiple entities would be intermingled, making it quite difficult to discern the financial or taxable results of a single business.

[zaasmi]

@zaasmi said in FIN621 GDB 1 Solution and Discussion:

Any equipment purchased for less than Rs. 3,000 is considered as miscellaneous expense.

• Full Disclosure principle of Accounting
  Under this concept as situations, circumstances and events that are relevant to financial statement is needed to be disclosed In other words, all of a company’s financial records and transactions have to be available for viewing.

[zaasmi]

@zaasmi said in FIN621 GDB 1 Solution and Discussion:

For valuation of inventory the company uses lower of cost or market value.

• Conservatism Principle of Accounting
  The conservatism principle is the general concept of recognizing expenses and liabilities as soon as possible when there is tmcertainty about the outcome, but to only recognize revenues and assets when they are assured of being received.
  The conservatism principle is the foundation for the lower of cost or market rule, which states that you should record inventory at the lower of either its acquisition cost or its current market value.

[zaasmi]

@zaasmi said in FIN621 GDB 1 Solution and Discussion:

Land purchased 15 years ago amounting to Rs. 10 million is now worth Rs. 50 million. However, in the books of account it is still reported as Rs. 10 million.

• Cost Principle of Accounting
  The cost Principle is an accounting principle that records assets at flab respective cash amounts to the time the asset was pin:based or aaaied. The amount of the asset that is recorded nay not be increased for improvements it market vale or illation, nor cant be updated to reflect any depreciation.
  For example, a business buys a building worth Rs.10,000 in cash. In accounting records, the value of the budding ail be entered at its cost price, i.e. Rs.10,000. After four years, the value of the budding goes up to Rs. 5,00,000. However, the accounting records would continue to show the value of the budding at the cost price of Rs.10,000 less depreciation.

[Aqsa Farhat]

thanks a lot zaasmi

[zaasmi]

@Aqsa-Farhat You’r welcome