15.3. Basic Accounting Concepts

Try these first

1. 1.

   What is the Business Entity Concept?

   Hint

   Think about the separation of finances.

2. 2.

   Can employee satisfaction be recorded in financial statements?

   Hint

   Consider what can be quantified.

3. 3.

   What does the Business Entity Concept entail?

   • A) The business and its owner are one.
   • B) The business is separate from its owner.
   • C) Only the owner's finances are recorded.

   Hint

   Think about how business transactions should be reported.

4. 4.

   True or False: The Money Measurement Concept allows for recording qualitative factors like employee morale.

   • True
   • False

   Hint

   Consider what types of transactions can be quantified.

5. 5.

   A company has incurred expenses of ₹1,00,000 for services in March but pays ₹30,000 in April. How should these be recorded according to the Matching Concept?

   Hint

   Think about the timing of expenses and associated revenues.

6. 6.

   You purchase a piece of equipment for ₹2,00,000, which later depreciates to ₹1,50,000. How will you manage this according to the Cost and Going Concern Concepts?

   Hint

   Consider how historical costs factor into long-term asset management.