Skip to content

CMA Foundation · Fundamentals of Financial and Cost Accounting · Accounting Principles, Concepts and Conventions

Which of the following is an item that financial accounting would NOT record in the books of Mehta Traders?

The opinion that the manager is valuable would not be recorded, because accounting captures only events measurable in money terms. Credit purchase of furniture, rent paid by cheque and cash sales are all monetary transactions and are recorded in the books.

  1. APurchase of furniture on credit for Rs 30,000
  2. BPayment of rent Rs 8,000 by cheque
  3. CThe owner's expert opinion that the shop's skilled manager is very valuableCorrect
  4. DSale of goods for cash Rs 12,000

Explanation

Accounting records only transactions that can be expressed in money. The manager's skill is a non-monetary, unmeasurable fact, so it is not entered in the books. The other three are monetary transactions that are journalised.

Did you get it right without looking?

One question tells you little. A timed set on Accounting Principles, Concepts and Conventions shows your real accuracy, how long you take and where you lose marks.

Practise Accounting Principles, Concepts and ConventionsFree diagnostic mock

More Accounting Principles, Concepts and Conventions questions