Question

The following is a list of problems which an accountant may well meet in practice:
(a) The transfer fee of a footballer.
(b) Goods are sold in one period but the cash for them is received in a later
period.
(c) The proprietor’s personal dwelling house has been used as security for a loan
which the bank has granted to the company.
(d) What profit to take in the third year of a five-year construction contract.
(e) Small stocks of stationery held at the accounting year end.
(f) Expenditure incurred in working on the improvement of a new drug.
Required:
1 Which accounting rule would the accountant most probably adopt in dealing
with each of the above problems?
2 State the reasons for your choice.

Answer 1

Explanation:

1. Business Entity, Money Measurement, Going Concern, Accounting Period, Cost Concept, Duality Aspect concept, Realisation Concept, Accrual Concept and Matching Concept.

2.