Question

Identify the concept / convention / principle followed/not followed in the following cases. Give reasons. 1.X a cloth merchant started a business investing Rs. 50,000. He bought goods for Rs. 40,000 that he sold for Rs. 55,000 to Mr. Y in the month of December 2013. Y pays him Rs. 40,000 immediately and promises to pay the balance after 6 month. For the year ending 31st March, 2014, X’s accountant enters the sales at Rs. 40,000. 2.Mohan purchased goods for Rs. 15,00,000. He sold 4/5th of these for a sum of Rs. 18,00,000 and spent Rs. 2,50,000 during the year. He calculated his Net profit as Rs. 3,50,000. 3.Also calculate the correct profit.State one purpose of Accounting standards. *​

Answer 1

Answer:

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Explanation:

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Answer 2

Answer:

1 Lack of Accural basis concept

2.Matching concept

Explanation:

The matching concept is an accounting practice whereby firms recognize revenues and their related expenses in the same accounting period. Firms report "revenues," that is, along with the "expenses" that brought them.

correct profit 4,00,000 (6,00,000-2,00,000)

as 2,50,000 is for purchase of RSS. 15,00,000.so 4/5 of 250000 is 2,00,000