Question 1
(1) An item of stock costing $60,000 was written down to its realizable value of $35,000.
(2) School fees paid to the proprietor's son was debited to the Drawings account.
(3) $2,500 paid for a printer was written off as expense(instead of being capitalized).
(4) Assets like inventory are valued in dollars, not units, for the financial statements.
(5) Company reports revenue when it is earned instead of when the cash is collected.
(6) Assets will normally be recorded at their historical cost in balance sheet.

Required:

Identify the name of the concept or principle for the above events.

Answer rating: 100% (QA)

Conservatism it is the convention by which when two values of a transaction or item of balance sheet ... View the full answer