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Question: ACE Traders purchased goods for RS. 30,00,000 and sold 70% of such goods during the accounting year ended 31st March, 2012. The market value of the remaining goods was Rs. 6,00,000. ACE Traders valued the closing stock at RS. 6,00,000 and not at Rs. 9,00,000 due to concept of ________ a) Money Measurement b) Periodicity c) Cost d) Conservatism

Answer: (d) Conservatism
Description: As per the conservatism concept the stock should be valued at cost or market price whichever is lower. The cost of remaining stock is Rs. 9,00,000 whereas its market value is Rs. 6,00,000/-. Hence, this valuation is in accordance with conservatism.

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Question: ACE Traders purchased goods for RS. 30,00,000 and sold 70% of such goods during the accounting year ended 31st March, 2012. The market value of the remaining goods was Rs. 6,00,000. ACE Traders valued the closing stock at RS. 6,00,000 and not at Rs. 9,00,000 due to concept of ________ a) Money Measurement b) Periodicity c) Cost d) Conservatism

Answer:

(d) Conservatism
Description: As per the conservatism concept the stock should be valued at cost or market price whichever is lower. The cost of remaining stock is Rs. 9,00,000 whereas its market value is Rs. 6,00,000/-. Hence, this valuation is in accordance with conservatism. Source: CoolInterview.com



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