Statement A: Raghav added Rs 1,00,000 in his restaurant 'Fresh Bites' and recorded this in his books of account.
Statement B: Now, he is an ambitious man. He expects his restaurant to become really famous and last for infinite years.
Statement C: After every month, he calculates his profit or loss to know how his business is performing.

Identify the concepts covered in these 3 statements.

Statement A: Business Entity
Statement B: Going concern
Statement C: Accounting Period

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Statement A: Business Entity
Statement B: Consistency
Statement C: Going concern

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Statement A: Consistency
Statement B: Going concern
Statement C: Accounting Period

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Statement A: Matching
Statement B: Cost concept
Statement C: Business Entity

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Solution

The correct option is A
Statement A: Business Entity
Statement B: Going concern
Statement C: Accounting Period

Statement A: Business (restaurant) and businessman (Raghav) are 2 separate entities in the books of account. This is covered by Business Entity concept.
Statement B: Going concern concept assumes that a business would survive for a fairly long time. Since he expects his restaurant last for infinite years, it is covered by Going concern concept.
Statement C: Financial statements are prepared at regular intervals is covered by Accounting period concept. Here, he calculates his profit or loss every month

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Similar questions

Raghav, who keeps his books on single entry system, tell you that his capital on 31st March, 2016 is Rs 3,74,000 and his capital on 1st April, 2015 was 3,84,000. He further informs you that during the year, he withdrew for his household purpose Rs 1,68,400. He sold his personal investment of Rs 40,000 a $2 %$ premium and brought that money into the business.

You are required to prepare statement of profit or loss.

Pawan is a cycle shop owner. At the beginning of a month, he bought a TV which has a life of 3 years for Rs. 12000. He sold cycles worth Rs. 8000. So he told his accountant that he has made a loss of Rs. 4000 (Rs. 8000 - Rs. 12000). His accountant corrects him stating that he cannot deduct the total amount of TV from the revenue. But he will just reduce on one year worth of TV value (1/3 * 12000) which is Rs. 4000. Hence he will have a profit of Rs. 4000 (Rs. 8000 - Rs. 4000).

Now, Pawan counters his accountant that if his business doesn't last and shuts down in a year, would it be correct to deduct only one year worth of TV value. His accountant responds by asking Pawan to be optimistic that his business would go on for a long time.

What are the concepts covered in this passage?

Q. Sumit borrowed a capital of Rs. 50,000 to start his food products business. In the first year he suffered a loss of 20%. He invested the remaining capital in a new sweets business and made a profit of 5%. How much was his profit or loss computed on his original capital ?

Q. Sumit borrowed capital of Rs.

50, 000

to start his food products business. In the first year, he suffered a loss of

20 %

. He invested the remaining capital in a new sweets business and made a profit of

5 %

. How much was his profit or loss computed on his original capital?

Q. John saves

$ 10

every month in his saving account. He withdrew

$ 50

once to go shopping. Now he has

$ 250

in his account. How long he has been saving?
months

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