identify the accounting concept which is being violated in following situation Mr Sumit owner of electronic shop has closed stopped at a cost of 500000 whose market value releasable value is a400000 . sumit recorded stock at cost of 5 lakh
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Prudence Concept says that, In view of uncertainty associated with future events, profits are not anticipated but losses are provided for as a matter of conservatism.
taking prudence concept of accounting closing stock are valued at lower of cost or NRV.
and if this concept is not followed the we can say it is violation of Prudence Concept.
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