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
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.
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