BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The owner of business purchase a motor van for his private use and it is not been recorded in the business account. Which accounting concept did it follow?
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Monetary measurement concept
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Consistency concept
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Business entity concept
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Materiality concept
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Explanation:
Detailed explanation-1: -An example is a sole trader or proprietorship. The sole trader takes money from the business by way of ‘drawings’, money for their own personal use.
Detailed explanation-2: -For example, when the owner invests money in the business, it is recorded as liability of the business to the owner. Similarly, when the owner takes away from the business cash/goods for his/her personal use, it is not treated as business expense.
Detailed explanation-3: -The business entity concept states that the business is separate from the owner(s) of the business.
Detailed explanation-4: -Accounting have concept of Matching, Dual aspect and Going concern but there is no concept of true and fair concept.
There is 1 question to complete.