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Commerce · Q141

Accounting

Graduate and Post Graduate · Commerce · question 141

Q141

Using 'lower of cost and net realisable value' for the purpose of inventory valuation is the implementation of which of the following concepts?

A.
The going concern concept
B.
The separate entity concept
C.
The prudence concept
Answer
D.
Matching concept

Answer: Option C

Solution

Answer: Option C
Solution:
A cash book with cash bank and discount column is commonly referred as The prudence concept. Under the prudence concept, do not overestimate the amount of revenues recognized or underestimate the amount of expenses.