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Materiality Concept

Statement: Th...

Question

Statement: The office building needs repairing just as urgently as it needs internal as well as external painting.
Assumptions:
I. Efficiency of people working in the office cannot be improved unless office building is repaired.
II. Repairing and painting of office building required funds.

A

Only assumption I is implicit

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B

Only assumption II is implicit

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C

Either I or II is implicit

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D

Neither I nor II is implicit

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E

Both I and II are implicit

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Solution

The correct option is D Neither I nor II is implicit
Clearly, nothing can be deduced regarding the effect of repairs of office building on efficiency of workers, or the requirement of funds for repairs, from the given statement. So, neither I nor II is implicit.

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Similar questions

Read the statement and select assumptions as following options.

Statements : The office building needs repairing just as urgently as it needs internal as well as external painting.

Q. Pass the necessary Journal entries to rectify the following errors:
(i) ₹ 15,000 paid as wages for the construction of office building debited to Salaries Account.
(ii) ₹ 20,000 spent on the purchases of material for the construction of building debited to Purchases Account.
(iii) ₹ 50,000 spent on the extension of building was debited to Building Repairs Account.
(iv) ₹ 25,000 spent on whitewash of a new building was charged to Building Repairs Account.
(v) ₹ 1,000 paid as installation charges for newly purchased second hand machinery posted to Cartage Account.
(vi) ₹ 10,000 paid as repairing charges on the reconditioning of a newly purchased second hand machinery debited to General Expenses Account.
(vii) ₹ 5,000 paid as repairing charges of an existing machine in use charged to Machinery Account.
(viii) ₹ 10,000 paid by cheque for a printer was charged to the Office Expense Account.

Giving reasons, explain the treatment of the following while estimating national income:

(i) Expenditure on maintenance of an office building

(ii) Expenditure on adding a floor to the office building

(iii) Contribution to the provident fund by the employees

Q. Short Answer Type Questions:
Giving reason identify whether the following are final expenditures or intermediate expenditure:
(i) Expenditure on maintenance of an office building.
(ii) Expenditure on improvement of a machine in a factory.

Q. In each question below is given statement followed by two assumption numbered I and II . An assumption is something supposed or taken for granted . You have to consider the statement and the following assumption and decide which of the assumption is implicit in the statement mark answer:
Statement :Many species of animals on our earth are still not studied scientifically and if we do not do this work urgently , many species will face extinction.
Assumption I: Earth may lose all type of life very shortly.
Assumption II: It is describe and possible to study scientifically many animal species.

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