Question

Select the most appropriate alternatives from those given below and rewrite the statements :

Accounts must be honestly prepared and they must disclose all material information in known as ______.
a) Disclosure Concept
b) Entity Concept
c) Cost Concept
d) Dual Aspect Concept

Answer 1

Accounts must be honestly prepared and they must disclose all material information is known as Disclosure Concept.

Explanation:
This concept requires that all significant information relating to the transactions of a business should be disclosed fully. It means that sufficient disclosure of all information should be made to the interested users of the financial statement of the business.

The entity concept defines that the business owner is different from the business.

The cost concept defines that the assets should be recorded in the books of accounts at the price at which they were acquired.

The dual aspect concept defines that every transaction in a business affects two accounts, i.e. if one side is debited, the other is credited. The system based on this concept is known as double-entry system.