Practice Cost Concept (6.2.4) - Accounting Concepts - ICSE 11 Accountancy

Practice: Cost Concept

Lesson 6.2.4Accounting Concepts

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10 questions

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4 cards from this section. Quick, good the night before a test.
Exercise
6 questions · about 4 min · pass mark 70%. Hints available.
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Quiz
4 questions · about 3 min · pass mark 70%. Hints available.
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6 sample questions

Question 1.
What does the cost concept state?
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Think about how businesses account for their purchases.
Question 2.
Why is the cost concept important?
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Consider what consistency means in accounting.
3Question 3.
What is the main principle of the cost concept?
- Assets are recorded at market value
- Assets are recorded at historical cost
- Assets are recorded at current value
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Remember the basic definition of the cost concept.
4Question 4.
True or False: The cost concept allows the recording of assets at their current market value.
- True
- False
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Think about what the cost concept emphasizes.
Question 5.
A company purchased equipment for ₹1,00,000. Due to changes in technology, the market value of this equipment increased to ₹1,50,000. Discuss how this equipment should be treated in the financial statements and analyze the potential implications.
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Consider the balance between historical costs and current market value.
Question 6.
If an asset value significantly decreases in the market, discuss how the cost concept influences the company’s decision on whether to write down the asset’s book value.
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Think about write-downs versus holding values in accounting practices.

6 more questions in this section. Enroll free to practise them all.