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    Poa T - 5

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    SHEVENA A/P VIJIAN
    This document provides an overview of accounting concepts and conventions. It discusses key concepts such as consistency, going concern assumption, matching principle, materiality, and revenue/expense recognition. It also provides examples of situations that violate accounting concepts and asks students to identify the violated concepts and explain the proper accounting treatment.

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    Poa T - 5

    Uploaded by

    SHEVENA A/P VIJIAN
    45 views2 pages
    This document provides an overview of accounting concepts and conventions. It discusses key concepts such as consistency, going concern assumption, matching principle, materiality, and revenue/expense recognition. It also provides examples of situations that violate accounting concepts and asks students to identify the violated concepts and explain the proper accounting treatment.

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    POA T - 5

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    This document provides an overview of accounting concepts and conventions. It discusses key concepts such as consistency, going concern assumption, matching principle, materiality, and revenue/expense recognition. It also provides examples of situations that violate accounting concepts and asks students to identify the violated concepts and explain the proper accounting treatment.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    45 views2 pages

    Poa T - 5

    Uploaded by

    SHEVENA A/P VIJIAN
    This document provides an overview of accounting concepts and conventions. It discusses key concepts such as consistency, going concern assumption, matching principle, materiality, and revenue/expense recognition. It also provides examples of situations that violate accounting concepts and asks students to identify the violated concepts and explain the proper accounting treatment.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
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    Tutorial 5 Accounting Concepts 1 LTJ 2022

    Tutorial 5: Accounting concepts and conventions painting. The difference was recorded in the Statement of Profit
    or loss as an extraordinary gain.
    Part A: d) A motorcycle shop reports all its assets at current market value
    instead of its original cost less accumulated depreciation.
    1. For each of the following statements, state the accounting concept that e) Extreme Trading changes its stock valuation method every year.
    is most closely related to it: Management would choose the method that will report the kind
    a) Once a particular financial period is adopted by a business, it is not of net profit that it wants to portray to its shareholders.
    changed from one period to the next. f) Arts Deco, records revenue on receiving a customer’s purchase
    b) The financial statements of a business report the economic activities order instead of when it delivers the goods to the customer.
    of the business only and do not include the economic activities of g) F&M has been sued by a local authority for polluting the river
    the owners of the business. behind its premises. There is a 60% chance that the company
    c) Generally a business is assumed to have an indefinite life, unless will have to pay out a very heavy fine which will drastically
    there is evidence to indicate otherwise. reduce its net profit. This was not mentioned in its recent
    d) The cost of a calculator in an office is treated as a period expense financial statements.
    rather than depreciating its cost over its useful life.
    e) The record of credit sales is done by referring to sales invoices Part B: (Questions for students own practice)
    issued to customers.
    f) An accountant generally recognises losses when there is evidence to Question 1
    indicate a high probability of the losses occurring, but gains are not
    recognised until they are actually realised. Kathy argues that since her business deals mostly with cash, it is not
    g) Business premises is shown on the statement of financial position as necessary to record the utilities incurred for the month of December
    RM100,000, its original cost 15 years ago, although its current although the utilities bills have been received but not yet paid. She plans
    value is RM1.5 million. to pay them in January next year and feels that these expenses should be
    h) Expenses are recognised in the same accounting period as the recorded only in January next year. What would you advise her?
    revenues which result from the incurrence of these expenses.

    2. For each of the following independent situations, one or more Question 2


    accounting concepts have been violated. State the concept(s) that has
    been violated and explain the correct procedure that should be used. You are the accountant of Big Boss Trading. From your experience, you
    noted that there were always some customers that have failed to settle
    a) Depreciation expense was not recorded for the current year because their debts in the past. Therefore, you have proposed to provide an
    the management wanted to show a higher net profit. allowance of doubtful debts of 3% on the total trade receivables amount
    b) Mr.Tan, the owner of a sundry shop, included his family’s personal of RM1.5 mil. Your boss has strong objected to this proposal. How
    use of some of the goods as business expenses. would you advise him?
    c) The Classic Shop reported its stock of antique paintings at
    RM700,000, the selling price, instead of RM300,000, the cost of the
    Tutorial 5 Accounting Concepts 2 LTJ 2022

    Question 3

    John, an eager junior bookkeeper is concerned that the firm he is working


    for does not record depreciation expense for the firm’s pencil sharpeners.
    The cost of these sharpeners amounts to RM100 and can be used for 2 years.
    He feels that these sharpeners should be depreciated using the straight-line
    method of depreciation. What is your opinion?

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