(D)
None of these
5.
If a firm takes into account advance received
from a customer as income it violates which
of the following concepts ?
(A) Money Measurement Concept
(B) Cost Concept
(C) Realisation Concept
(D) Separate Entity Concept
Answers
Answer:
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Answer:
If a firm takes into account advance received from a customer as income it violates following concept accural concept.
Explanation:
In the given case, where a firm considers an advance amount from a customer as its income is a voilation of accural concept.
Money Measurement Concept:;
Money measurement concept is an important accounting concept that is based on the theory that a company should be recording only those transactions that can be measured or expressed in monetary terms on the financial statement.
Cost Concept:
The concept of cost is a key concept in Economics. It refers to the amount of payment made to acquire any goods and services. In a simpler way, the concept of cost is a financial valuation of resources, materials, risks, time and utilities consumed to purchase goods and services.
Realisation Concept:
The realization concept is that the revenue is recognized and recorded in the period in which they are realized; similarly to accrual basis accounting. In similar term, we realize as revenues when we deliver the agreed product with customers or the services have been rendered to them.
Separate Entity Concept:
The separate entity concept states that we should always separately record the transactions of a business and its owners. The concept is most critical in regard to a sole proprietorship, since this is the situation in which the affairs of the owner and the business are most likely to be intermingled.
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