Question

Identify the two pair of accounting concept under which the life of business is assumed to continue to carry, so the firm invested Rs. 50,000 to purchase a machinery and assumed to earn Rs. 10,000 as a revenue from it.

Answer 1

Financial Accounting both practical and theory-based is built on some accounting principles. There are some accounting equations that support these too. And these accounting principles are built on a few assumptions that we call accounting concepts. These thirteen accounting concepts find wide acceptance across the world by accounting professionals and auditors

Answer 2

The concepts are Going concern and Realisation.

• The former refers to a firm that is amply monetarily sound to attain its financial commitments.
• The business focuses to typically continue operating going forward. If a firm is deemed to remain an ongoing concern, some costs and assets may be postponed in financial reporting.
• Whereas, in the latter, income is recognised only when it has been realised. It principally refers to a company's cash intake through the selling of goods or services.
• The firm considers this income to be realised when it is legally due to be received. Thus, the profit generated will be reported when it is attained.