Question

Transactions and events are guided by generally accepted accounting principles subject to the law of land.

• A. True
• B. False

Answer 1

The correct option is A True

Accounting is based on the certain concepts and conventions which are commonly known as Generally Accepted Accounting principles".

Each transaction is based on some or other accounting concept. For example:

1) Furniture costing Rs.1000 is purchased- based on cost concept

2) Director is not having good health- based on money measurement concept which signifies that only those transactions are recorded which are having monetary value.

3) Provision for bad debts- based on conservatism convention which signifies that business records all anticipated losses.