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Offline Mr. Patel

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WAY OF ASKING THEORY QUESTIONS
« on: September 24, 2011, 06:24:41 PM »
THE WAY OF ASKING THEORY QUESTIONS
IN EXAMINATION POINT OF VIEW FOR PCC /IPCC


FUNDAMENTALS OF ACCOUNTING:

1.  What are Fundamental Accounting Assumptions? Write short notes on them. Ans: The Fundamental Accounting Assumptions are­
a.  Going Concern: The enterprise is normally viewed as a going concern, that is as continuing in operation  for the foreseeable  future. It is assumed  that the enterprise  has neither the intention nor the necessity of liquidation or of curtailing materially the scale of operation.

b.  Consistency: It is assumed that accounting policies are consistent from one period to another.

c.  Accrual: Revenues and Costs are accrued, that is recognized as they are earned or incurred and recorded in the Financial Statements of the periods to which they relate.

AVERAGE DUE DATE:

1.  What is ADD, areas where ADD is calculated?

Ans: Definition:  Average Due Date (ADD) is an equated  date of payment  on which a single payment can be made in lieu of several payments due for payment on different dates, without loss of interest to either party. Thus, ADD is the Arithmetic Average of various payments.

Areas where ADD method is followed:

a.  For calculation of ADD when various payments are due on different dates and single payment is to be made by debtor. (Including the settlement of various bills due on different dates).

b.  For calculating Interest on drawings made by partners on different dates.

c.  For settlement of Contra Accounts. E.g. X & Y sells goods to each other on different dates.

d.  For  calculation  of  ADD  when  amount  is  lent  by  the  creditor  in  one  installment  and repayment of the amount lent is to be made in various installments.
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WAY OF ASKING THEORY QUESTIONS
« on: September 24, 2011, 06:24:41 PM »

 
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