(a) Define the term ‘accounting concept’.
(a) Define the term ‘accounting concept’.
(b) Identify the suitable accounting concept which would best apply to the
following scenarios:
(i) An amount included in financial statements to represent the amount
expected not to be recoverable from a customer.
(ii) Rent paid in the current year but relating to the next financial year to be
removed from the current year income statement charge.
(iii) The preparation of financial statements on the assumption that the
business will operate to a foreseeable future.
(iv) Cash for the business taken by the owner recorded in the drawings
account.
(v) Ensuring that the treatment of transactions of same type is done in the
same way.
(c) A businessman had the following balances at the beginning and the end of
a financial year:
May 2009 May 2008
K K
Rent prepaid 16,000 12,000
Electricity accruals 11,000 19,000
During the year to 31 May 2009, the businessman made the following payments:
K
Rent 86,000
Electricity 49,000
Required:
Prepare T accounts for Rent and Electricity showing how much should be charged
to the income statement for the year ended 31 May 2009.
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