A manufacturing concern has investments, the market value of which has declined
substantially. However, it is still showing them in its books at the cost. Which accounting
principle has been violated here?
A. Historical Cost Principle
B. Full Disclosure Principle
C. Accrual Concept
D. Prudence Concept
Dear Student
Answer is D
the company is not following the Concept of Prudence. It should bring down the value of current assets to its market value because the financial statements will otherwise show a better picture than what it actually is.
Regards
Answer is D
the company is not following the Concept of Prudence. It should bring down the value of current assets to its market value because the financial statements will otherwise show a better picture than what it actually is.
Regards