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  • This topic has 3 replies, 2 voices, and was last updated 1 year ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • October 27, 2021 at 7:19 am #639168
    James124
    Participant
    • Topics: 159
    • Replies: 136
    • ☆☆☆

    Listed below are some comments on accounting concepts.
    1) Financial statements always treat the business as a separate entity.
    2) Materiality means that only items having a physical existence may be recognised as assets.
    3) Provisions are estimates and therefore can be altered to make the financial results of a business
    more attractive to investors.
    Which, if any, of these comments is correct, according to the IASB’s Conceptual Framework for
    Financial Reporting?
    A 1 only
    B 2 only
    C 3 only
    D None of them

    Answer-A.
    How is first statement correct if Financial Statements are made by Sole-trader or partnership? There statements also considered to deal business as separate entity?

    October 27, 2021 at 8:03 am #639179
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51576
    • ☆☆☆☆☆

    It makes no difference whether the business is a company or a sole trader or a partnership. The financial statements are for the business and treat the business as separate from the owner(s).

    I state this in the very first chapter of our free lecture notes and in the lectures working through this chapter.

    October 27, 2021 at 8:09 am #639183
    James124
    Participant
    • Topics: 159
    • Replies: 136
    • ☆☆☆

    This is due to Accounting entity concept?

    October 27, 2021 at 8:13 am #639185
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51576
    • ☆☆☆☆☆

    It is the separate entity concept.

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    Posts
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