Answered: Alfa and Co., manufacturer of jeans has…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Alfa and Co., manufacturer of jeans has partially completed jeans in the production process. So far the company has spent Rs. 50,000 on this lot. If the company decides to sell these partially completed jeans, they are unlikely to fetch any value. The accountant however valued this work in progress at Rs. 50,000 and shown the same in the balance sheet. Which of the following concept is applied here?

a)Materiality principle

b)Going concern principle

c)Matching principle

d)Consistency

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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