Accounting Principles and Practice

The company is following FIFO method of valuation of inventories from year to year basis on compliance with the fundamental accounting assumption of consistency. The correct option is (5).

Only art objects are being brought within the purview of the capital assets. Literary books do not fall in this category.

Going concern is one of the three fundamental accounting assumptions specified in AS-1, along with accrual and business entity. Materiality and prudence are important accounting concepts but are not classified as fundamental assumptions in the accounting framework.

Trademarks are intangible assets because they lack physical substance but have value and provide long-term benefits to the business. Unlike tangible fixed assets (like machinery or buildings), trademarks cannot be touched or seen but represent legal rights and brand recognition.

Assets are resources controlled by an entity primarily for generating future economic benefits through use in business operations. They're not held for immediate resale or conversion to cash - those would be inventory or investments.

If redemption is made by using divisible profits then an amount of profit so used for redeeming nominal value would be transferred to Capital Redemption Reserve A/c.

Those debentures which are secured by either a fixed charge or a floating charge on the assets of the company are called secured or mortgage debentures.

This is the correct answer.

It is an asset as it is owned by him.

Profit increases owner's equity (capital) by definition. Profit also increases assets - either cash received or receivables created. Accounting equation: Assets = Liabilities + Capital. When profit occurs, both sides increase - assets rise and capital (retained earnings) rises. 'Neither assets nor capital' would mean no profit at all.

Depreciation is systematic allocation of asset cost over useful life due to wear/tear, not market fluctuation. Physical wear and tear (usage, aging) is primary cause. Fall in market value is irrelevant to depreciation calculation. Fall in money value affects inflation accounting, not depreciation. None of these is incorrect since C is correct.

Depreciation method (straight line, written down value, units of production) is an accounting policy - the chosen approach for systematic allocation. Accounting estimate involves judgement like useful life or residual value. Changing from SLM to WDV method is policy change. Changing useful life estimate is estimate change. Measurement discipline is not standard terminology.

Goodwill represents the intangible value of a business - its reputation, brand recognition, customer loyalty, and other non-physical assets that generate future economic benefits. Since goodwill cannot be physically touched or seen, it is classified as an intangible asset. Current assets are short-term, fictitious assets are deferred revenue expenditures (like preliminary expenses), and tangible assets have physical form - none of which describe goodwill.

According to the Companies Act 1956, unclaimed dividend should be transferred to the Investor education and Protection Fund Account. This is to be shown under Current Liabilities as Unpaid Dividend in the Balance Sheet.

Depreciation is allowed only on fixed assets.