A customer has filed a suit against a trader who has supplied poor quality goods to him. It is known that the court judgement will be in favour of the customer and the trader will be required to pay the damages. However, the amount of legal damages is not known with certainity. The accounting year has already ended and the books are now finalized to ascertain true profit & loss. The accountant of the trader has advised him not to consider the expected loss on account of payment of legal damages because the amount is not certain and the final judgement of the court is not yet out. Do you think the accountant is right in his approach?

 chal haramn!!!!!!! :P

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no he is wrong. according to prudenceconcept we should provide for all anticipated losses

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Nhi pata
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