Your friend Rakib started a new business in Dhaka. He has been running the business for the last 3 years now and in the current year, he had to bear a huge loss in his business. Rakib is very confused about the financial position of his business because his business is doing very well in terms of attracting more customers. He is now doubting that may be he has made some errors in culculating the figures and accounting the transactions. You are his close friend and he wants your advice on the following issues: • He started his business in the middle of the yeur but he charged expenses for the entire year. * He estimated doubtful debts to be (8% to 15%) but later went on to charge 5% as a provision for bad debt expense. * He has recorded most of the assets at the market values in his books. * He had purchased some personal fumiture which he has expensed in the company accounts. • He has depreciated items such as dustbins and stationaries. Reguirement Using your knowledge of Conceptual Framework, provide suggestions to your friend whether his Accounting treatments are correct or not. You must explain your answer by providing the names of the appropriate Accounting concepts applicable to each of the cases.
Your friend Rakib started a new business in Dhaka. He has been running the business for the last 3 years now and in the current year, he had to bear a huge loss in his business. Rakib is very confused about the financial position of his business because his business is doing very well in terms of attracting more customers. He is now doubting that may be he has made some errors in culculating the figures and accounting the transactions.
You are his close friend and he wants your advice on the following issues:
• He started his business in the middle of the yeur but he charged expenses for the entire year.
* He estimated doubtful debts to be (8% to 15%) but later went on to charge 5% as a provision for
* He has recorded most of the assets at the market values in his books.
* He had purchased some personal fumiture which he has expensed in the company accounts.
• He has
Reguirement Using your knowledge of Conceptual Framework, provide suggestions to your friend whether his Accounting treatments are correct or not. You must explain your answer by providing the names of the appropriate Accounting concepts applicable to each of the cases.
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