Explanation

Small items like pencils and pens are written off within a year according to the materiality concept.

This concept allows minor expenses to be immediately recorded rather than capitalized, as their impact on financial statements is negligible.

Explanation

The cost which is to be incurred even when a business unit is closed is a shutdown cost.

The shut down price is the minimum price a business needs to justify remaining in the market in the short run.

Explanation

The cost concept basically recognises historical cost or the acquisition cost of the asset.

The value of an asset is to be determined on the basis of historical cost.

Explanation

The wrong rule is "Real account-credit what comes in."

The correct rule for real accounts is to credit what goes out.

Real accounts record assets and liabilities, and credits decrease asset accounts and increase liability accounts.

Explanation

MOST stands for Mission, Objectives, Strategies, and Tactics.

It is a framework used for strategic planning, helping organizations define their mission, set objectives, develop strategies, and outline tactics to achieve their goals.

Explanation

IAASB stands for International Auditing and Assurance Standards Board.

It sets international standards for auditing, assurance, and other related services to enhance the quality and consistency of financial reporting globally.

Explanation

The accounts that record expenses, gains, and losses are nominal accounts.

These accounts track income and expenditure for a specific period, including revenue, expenses, gains, and losses.

Explanation

To determine C's share of the net income:

Calculate C's share:

• C's Share = Net Income × C's Ratio
• C's Share = $60,000 × 20%
• C's Share = $60,000 × 0.20 = $12,000

So, C's share of the net income is $12,000.

Explanation

In accounting, the basic equation is:

Assets = Liabilities + Capital

Rearranging this:

Capital = Assets - Liabilities

This represents the owner's equity in the business.

Correct Answer: Capital is equal to assets minus liabilities 

Explanation

Fundamental accounting assumptions are:

1. Business Entity: The business is separate from its owners.
2. Going Concern: The business will continue operating indefinitely.
3. Dual Aspect: Every transaction affects the accounting equation (Assets = Liabilities + Equity).
4. Materiality: Significant information must be disclosed to influence stakeholders' decisions.