Question
Write short-note on: $(1)$ Going Concern Concept :
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Answer
When business is started, it is assumed that the same will continuefor very long period in future. This is known as Going Concern Concept. Fixed assets areshown in the balance sheet at their depreciated values. In other words, realisable or marketvalue of fixed assets are not shown in the balance sheet. As the fixed assets are for use inbusiness for long period and not meant for sale, their market values are not shown in theB/S based on going concern assumption. Prepaid exp.are also shown on the asset side ofbalance sheet because of the assumption that the business will continue for a long time.Deffered revenue expenditures are also show on the asset side of balance sheet. Based onthis concept expenses are divided into two parts: Capital expenses and Revenue expenses.From the following circumstances going concern concept should not be followed (will nottake in mind). $(1)$ When the object for which a business was established is achieved or is likely to beaccomplished in very short period. $(2)$ When an industrial unit is declared sick. $(3)$ When a business is passing through severe financial crises and is likely to be liquidatedvery shortly. $(4)$ When a liquidator is appointed for liquidation of a company/entity.
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Similar questions
Record the following transactions in the journal proper of Vineet Virani.
$(1)$ Brought cash of $₹ 20,000$, furniture of $₹ 5000$, goods of $₹ 10,000$ and machinery $₹ 15,000$ to start the business.
$(2)$ Brought personal debtors of $₹ 15,000$ and personal creditors of $₹ 5000$ in the business.
$(3)$ Brought personal dues from Vishal of $₹ 10,000$ and personal debt to Vivek of $₹ 18,000$ in the business.
$(4)$ Brought personal creditors of $₹ 8000$ in the business.
$(5)$ Brought personal furniture of $₹ 7000$ and personal vehicles of $₹ 15,000$ in the business.
→$(1)$ Brought cash of $₹ 20,000$, furniture of $₹ 5000$, goods of $₹ 10,000$ and machinery $₹ 15,000$ to start the business.
$(2)$ Brought personal debtors of $₹ 15,000$ and personal creditors of $₹ 5000$ in the business.
$(3)$ Brought personal dues from Vishal of $₹ 10,000$ and personal debt to Vivek of $₹ 18,000$ in the business.
$(4)$ Brought personal creditors of $₹ 8000$ in the business.
$(5)$ Brought personal furniture of $₹ 7000$ and personal vehicles of $₹ 15,000$ in the business.
Write Journal in the books of shree Vasant Traders for the following transaction:$2014$ June
$1$ A current account is opened with $SBI$ bank by depositing $₹ 20,000.$
$2$ Goods sold for $₹ 5000$, the amount of which directly deposited in bank.
$4$ Furniture of $₹ 10,000$ is purchased, payment is made through cheque.
$8$ Withdrawn from bank $₹ 400$ for personal expense and $₹ 700$ for office expenses.
$10$ A cheque of $₹ 1500$ received from Virat.
$15$ Goods of $₹ 3000$ sold on cash to Parthiv, Out of which $50 \%$ amount received by cheque.
$18$ Fire insurance premium $₹ 450$ and life insurance premium of $₹300$ are paid by cheque.
$22$ A cheque of dividend warrant of $₹ 200$ deposited in bank
$25$ Bank has credited $₹ 100$ for bank interest and debited $₹ 50$ as bank charges to our account.
$28$ A cheque of $₹ 800$ issued to Param as final settlement
$30$ A cheque of $₹ 600$ is received from Shivaji
→$1$ A current account is opened with $SBI$ bank by depositing $₹ 20,000.$
$2$ Goods sold for $₹ 5000$, the amount of which directly deposited in bank.
$4$ Furniture of $₹ 10,000$ is purchased, payment is made through cheque.
$8$ Withdrawn from bank $₹ 400$ for personal expense and $₹ 700$ for office expenses.
$10$ A cheque of $₹ 1500$ received from Virat.
$15$ Goods of $₹ 3000$ sold on cash to Parthiv, Out of which $50 \%$ amount received by cheque.
$18$ Fire insurance premium $₹ 450$ and life insurance premium of $₹300$ are paid by cheque.
$22$ A cheque of dividend warrant of $₹ 200$ deposited in bank
$25$ Bank has credited $₹ 100$ for bank interest and debited $₹ 50$ as bank charges to our account.
$28$ A cheque of $₹ 800$ issued to Param as final settlement
$30$ A cheque of $₹ 600$ is received from Shivaji
Pass adjustment entry for the following and also show its effect in final accounts: The following expenses are outstanding at the end of the year, Rent-rate $Rs. 5,000$ salary $Rs.3,000.$
→Trial Balance of Manisha as on $31-03-2015.$
Adjustment: Calculate interest at $10 \%$ on capital.
→Adjustment: Calculate interest at $10 \%$ on capital.
State the name of the accounting principle, concept or convention which is followed in the practices or statements given below :
$(1)$ Market value of fixed assets as on $31-03-2016$ is ? $5$ lakhs and depreciated value is f $4$ lakhs on this date. In this case, fixed assets will be shown in the balance sheet at ? $4$ lakhs on $31-03-2016$ and not at $”x“$ $5$ lakhs.
$(2)$ Usually, provision for discount reserve on creditors is not made.
$(3)$ Provision is made for doubtful debtors.
→$(1)$ Market value of fixed assets as on $31-03-2016$ is ? $5$ lakhs and depreciated value is f $4$ lakhs on this date. In this case, fixed assets will be shown in the balance sheet at ? $4$ lakhs on $31-03-2016$ and not at $”x“$ $5$ lakhs.
$(2)$ Usually, provision for discount reserve on creditors is not made.
$(3)$ Provision is made for doubtful debtors.
Journal entries are written as follows and effect of transaction is explained in equation form.
$1$. Brought $Rs. 50,000$ and commenced business.
$2.$ Furniture purchased for $Rs. 10,000$
$3.$ Goods for $Rs. 12,000$ purchased in cash.
→$1$. Brought $Rs. 50,000$ and commenced business.
$2.$ Furniture purchased for $Rs. 10,000$
$3.$ Goods for $Rs. 12,000$ purchased in cash.
Write journal entries for the following transactions and explain accounting treatments basedon equation :
$(1)$ Withdrew $₹ 5000$ from bank.
$(2)$ Salary of $₹ 4000$ paid by cheque.
$(3)$ Commission received in cash $₹ 3000$ and $₹ 2500$ are outstanding.
→$(1)$ Withdrew $₹ 5000$ from bank.
$(2)$ Salary of $₹ 4000$ paid by cheque.
$(3)$ Commission received in cash $₹ 3000$ and $₹ 2500$ are outstanding.
Explain the concept of consistency giving example.
Write journal entry for each transaction and explain its accounting treatment of individual transaction as per equation method :
Accounts are settled with Ramesh.
Accounts are settled with Ramesh.
Write short-notes: $(1)$ Extracting Baki of Khata :
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