Theory Base of Accountacy

Capital contributed by the proprietor is credited to his Capital Account

Goods sold on credit to Ramesh-Ramesh's A/c is debited and Sales A/c is credited

Mohan has entered into an agreement whereby he will earn Rs. 10 lakhs for the services to be provided in the next year. The income should be recognized as revenue in the next year after services have been provided

The calibre or quality of the management team is not disclosed in the Balance Sheet

Assets are recorded in the books at the cost incurred for acquisition of such assets

A business for which Financial Statements are prepared is separate and distinct from the owner of the entity

The assumption is made that the entity in question will remain in business for an indefinite period of time

Purchase of pen is treated as an expense

Closing Stock is valued at lower of cost or market value

Financial Statements of the firm are prepared every year on 31st March