“Mr. A had been doing the business of manufacturing toys since 2008. During the year
2020, a likely loss of 50,000 on account of bad and doubtful debts was foreseen in the
business. A likely gain of 25,000 on account of getting discount on creditors was
expected to be received. Mr. A ignored the loss due to bad debts and considered the gain
due to discount on creditors while preparing final accounts. Which accounting concept will it
violate? Explain the concept.
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Principles of accounting.
AS per AS 1 changes in accounting policies income should be recorded on accrual basis and expenses should be recorded on time.
As per AS 9 revenue recognition criteria if there is not any uncertainty of revenue then it should be recognized.
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