CA Foundation - Accounting & Financial Reporting

Financial Statements, Depreciation, Inventories & Partnership question bank (Principles and Practice of Accounting)

Practice 72 free CA Foundation - Accounting & Financial Reporting Principles and Practice of Accounting - Financial Statements, Depreciation, Inventories & Partnership questions with answers and step-by-step solutions.

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Q1.

CA Foundation Accounting: Which fundamental accounting convention dictates that an accountant must anticipate no profits, but provide for all possible foreseeable losses in 'Theoretical Framework: GAAP, Accounting Concepts, Principles and Conventions'?

(A)

Prudence / Conservatism Convention (Theoretical Framework: GAAP, Accounting Concepts, Principles and Conventions)

(B)

Materiality Convention

(C)

Consistency Convention

(D)

Full Disclosure Convention

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Q2.

Inventory Valuation (AS 2): Under Accounting Standard 2 (AS 2) in 'Theoretical Framework: GAAP, Accounting Concepts, Principles and Conventions', inventories should be valued at:

(A)

Lower of historical cost and net realizable value (NRV) (Theoretical Framework: GAAP, Accounting Concepts, Principles and Conventions)

(B)

Replacement cost exclusively

(C)

Selling price plus estimated profit margin

(D)

Higher of cost and market value

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