Question

on 1st february 2020 manoj sold good to anoop for rs 10,000 on credit and he recieved cash for the same on 10th february 2020. According to manoj this transaction is to be recorded only in 10th february, is he correct?why? give reasons.pls anwer​

Answer 1

Answer:

Ya it is correct

Explanation:

According to the conservatism(prudence) concept, one should not anticipated(record) income and should provide for all possible loss or expenses(provision).If accountant has various option to value a particular asset, he should choose the method with leizzure value.(he should follow conservatism approach).

As we have study that closing stock is valued at a cost or NRV whichever is lower. This is the result of conservatism concept. For this concept their should be atleast three qualitative characteristics of Financial statement namely:

1. Prudence
2. Neutrality
3. Faithful representation of alternate values.

Hope it helps you