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Unit 1: Basic Accounting Review

who are having greater aspirations to become auditors. The firm is having an objective to Notes
recruit freshers to conduct preliminary auditing process with their corporate clients.
For which the firm would like to select the right person who is having conceptual
knowledge as well as application on the subjects. It has given the following Balance sheet
to the participants to study the conceptual applications. The participants are required to
enlist the various concepts and conventions of accounting.
(a) List out the various accounting concepts dealt in the above balance sheet.
(b) Explain the treatment of accounting concepts.

8. Why does the accounting equation remain in balance?
9. Liability is defined as currently existing obligations which a business enterprise requires
to meet sometime in future. Explain.

10. What are the key accounting conventions?

Answers: Self Assessment

1. money or money’s worth 2. dual effect
3. Horizontal Consistency 4. realization
5. Accumulated depreciation 6. debtors

7. Contingent liability 8. Capital
9. (d) 10. (c)
11. (d) 12. (a)
13. (c) 14. (d)
15. (e)

1.11 Further Readings

Books Khan and Jain, “Management Accounting”.
M. P. Pandikumar, “Accounting & Finance for Managers”, Excel Books, New Delhi.
R. L. Gupta and Radhaswamy, “Advanced Accountancy”.
S. N. Maheswari, “Management Accounting”.

V. K. Goyal, “Financial Accounting”, Excel Books, New Delhi.

Online link www.futureaccountant.com

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