Question 1Which concepts are being ignored in each of the following scenarios?a. Inventory is valued at selling price given that the business has never failed to sell its inventory.b. A sole trader decides to include the petrol costs in full as business expenses despite some of themileage being for personal use.c. A similar business has recently been sold for $80,000 more than the book value of the net assets.As a result, the owner of a business wishes to include goodwill in the non-current assets at asimilar value to reflect the belief that the business is worth more than its net assets.d. Including a sale to a regular customer before the order is received.

(1)Prudence Concept:Under the prudence concept, we do not overestimate the amount of revenues…

Question 1 Which concepts are being ignored in each of the following scenarios? a. Inventory is valued at selling price given that the business has never failed to sell its inventory. b. A sole trader decides to include the petrol costs in full as business expenses despite some of the mileage being for personal use. e. A similar business has recently been sold for $80,000 more than the book value of the net assets. As a result, the owner of a business wishes to include goodwill in the non-current assets at a similar value to reflect the belief that the business is worth more than its net assets. d. Including a sale to a regular customer before the order is received.

Question 1 Which concepts are being ignored in each of the following scenarios? a. Inventory is valued at selling price given that the business has never failed to sell its inventory. b. A sole trader decides to include the petrol costs in full as business expenses despite some of the mileage being for personal use. e. A similar business has recently been sold for $80,000 more than the book value of the net assets. As a result, the owner of a business wishes to include goodwill in the non-current assets at a similar value to reflect the belief that the business is worth more than its net assets. d. Including a sale to a regular customer before the order is received.

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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