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Going Concern Concept

If a machiner...

Question

If a machinery is purchased for Rs.1,00,000 the asset would be recorded in the books at Rs.1,00,000 even if its market value at that time happens to be Rs.1,40,000. In case a year after, the market value of this assets comes down to Rs.90,000, it will ordinarily continue to be shown at Rs.1,00,000 and not at Rs.90,000 due to _________________.

A

Realization concept

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B

Present value concept

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C

Cost concept

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D

Money measurement concept

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Solution

The correct option is C Cost concept
Cost Concept states that the assets shall be recorded at their historical cost.

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Similar questions

Q. If a machinery is purchased for Rs. 1,00,000, the asset would be recorded in the books at Rs. 1,00,000 even if its market value at that time happens to be Rs. 1,40,000. In case a year after, the market value of this asset comes down to Rs. 90,000, it will ordinarily continue to be show at Rs. 1,00,000 and not at Rs. 90,000 due to _______________.

Q. A machinery was purchased on 1st April, 2005, for Rs.

10, 00, 000

. Its installation charges were Rs.

1, 00, 000

. But its market value as on 31st March 2006, was Rs.

13, 00, 000

. If the company shows the machinery at Rs.

13, 00, 000

in its B/S, which of the following concepts is not followed by the company?

Q. Samar purchased a machinery worth Rs. 1,00,000 and spent Rs. 20,000 on its repairs and Rs. 15,000 on its carriage. He decided to sell the machinery at 25% margin on selling price. What will be the expected sale value of machinery?

Q. K and A are partners in a firm. They share profits and losses in the ratio of 4:1. They decide to dissolve the firm. K Capital - Rs. 1,60,000, A Capital - Rs. 1,00,000, Total assets - Rs. 3,95,000, Total liabilities - Rs. 1,35,000. On dissolution assets realized Rs. 4,25,000 & liabilities settled at Rs. 1,10,000. Net profit or loss on realization will be __________ .

Q. Mr. A purchased a machinery costing Rs.

1, 00, 000

1^{s t}

2005

. Transportation and installation charges were incurred amounting Rs.

10, 000

4, 000

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10, 000

. Market value of the machine was estimated at Rs.

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Which of the following concepts are violated by A?

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