Day: May 12, 2019

The effect of the prudence concept is that…?

Select ONE answer:

1. net profit is the difference between revenues and expenses rather than the difference between receipts and payments.
2. losses should be provided for as soon as they are foreseen and profit should not be recorded prematurely.
3. similar items should be treated in a consistent way from one accounting period to the next.
4. None of the above.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Accounting KS5 classes.

The answer is 2

1. is the accruals concept.
2. Correct
3. is the consistency concept.
4. Not correct

 

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