Multiple choice

Which of the following statements is true?

  1. Going concern concept assumes that business will be carried on for a definite period.

  2. The capital losses need not be deducted to ascertain net income.

  3. Provision for bad and doubtful debts is created according to the concept of conservatism.

  4. Materiality concept states that all business transactions are to be recorded however insignificant they may be.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Going concern concept assumes that business will be carried on for an INDEFINITE period. Capital losses need to be deducted to ascertain net income. The provision for bad debts is made in accordance with the concept of conservatism. Materiality concept states that transactions of insignificant value need not be recorded.

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