Answer To Financial Accounting Question Paper FA No 3: Test on Accounting Concept & Regulatory Framework

Answer to FA Test Paper FA No 3

Test On Accounting Concept & Regulatory Framework



Business Entity

Mr X, the sole proprietor of Company XY does not list his personal house on the balance sheet of Company XY


Full Disclosure

Company A included a disclosure note describing a lawsuit it is defending even though the suit has not yet been settled


Realization or Revenue Recognition principle

Company B records revenue when products are delivered and services being rendered, even though cash has not yet been received.


Matching principle

Company A amortizes the cost of a trade mark over the trade mark’s useful life.


Historical Cost /original transaction value principle

Company X depreciates the cost of its equipment rather than the replacement value of the equipment.


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