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The proprietor of a business is treated as a creditor for capital introduced by him, according to:-a)Money Measurement Conceptb)Cost Conceptc)Entity Conceptd)Dual Aspect Concept.Correct answer is option 'C'. Can you explain this answer? for CA Foundation 2022 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about The proprietor of a business is treated as a
creditor for capital introduced by him, according to:-a)Money Measurement Conceptb)Cost Conceptc)Entity Conceptd)Dual Aspect Concept.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2022 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The proprietor of a business is treated as a creditor for capital introduced by him, according to:-a)Money Measurement Conceptb)Cost Conceptc)Entity
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Question
The proprietor of a business is treated as a creditor for capital introduced by him according to __________.
A
Money Measurement Concept
B
Cost Concept
C
Business Entity Concept
D
Dual Aspect Concept
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स्रोत : www.toppr.com
[Solved] According to the _________concept, the proprietor is tr
A proprietor is an individual who owns a business establishment or sole proprietorship. This person has legal use of the assets and their operations. Concept o
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According to the _________concept, the proprietor is treated as a creditor to the extent of his capital.
This question was previously asked in
AWES PGT 2012 - Commerce Official Paper
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Cost Entity Money measurement Dual aspect
Answer (Detailed Solution Below)
Option 2 : Entity
Detailed Solution
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A proprietor is an individual who owns a business establishment or sole proprietorship. This person has legal use of the assets and their operations.
Concept of Business Entity:
The concept of business entity assumes that business has a distinct and separate entity from its owners.
It means that for the purposes of accounting, the business and its owners are to be treated as two separate entities.
Keeping this in view, when a person brings in some money as capital into his business, in accounting records, it is treated as a liability of the business to the owner.
Here, one separate entity (owner) is assumed to be giving money to another distinct entity (business unit).
Similarly, when the owner withdraws any money from the business for his personal expenses (drawings), it is treated as a reduction of the owner’s capital and consequently a reduction in the liabilities of the business.
Hence, according to the Entity concept, the proprietor is treated as a creditor to the extent of his capital.
1. Cost concept:
The cost concept of accounting states that all acquisition of items (such as assets or things needed for expending) should be recorded and retained in books at cost.
Thus, if a balance sheet shows an asset at a certain value it should be assumed that this is its cost unless it is categorically stated otherwise.
2. Money measurement concept:
The money measurement concept (also called monetary measurement concept) underlines the fact that in accounting and economics generally, every recorded event or transaction is measured in terms of money, the local currency monetary unit of measure.
3. Dual aspect concept:
According to the Dual Aspect Concept, each business transaction has a dual or a two-way effect.
This implies that a particular business transaction involves a minimum of two accounts when recorded in the books of accounts.
This principle is the foundation of the Double Entry System of accounting.
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स्रोत : testbook.com
The proprietor of a business is treated as a creditor for capital introduced by him, according to:
According to business entity concept; A company is distinguished from its proprietors/owners.As a proprietor invest money into company,its is the responsibility of business (company) to return interest to him in the form of profitsHence proprietor will be considered as creditor according to entity concept
CA Foundation Question
The proprietor of a business is treated as a creditor for capital introduced by him, according to:-
a)
Money Measurement Concept
b) Cost Concept c) Entity Concept d)
Dual Aspect Concept.
Correct answer is option 'C'. Can you explain this answer?
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Test: Accounting Concepts, Principles And Conventions - 4
Answers
Bugude Santhoshini Jul 16, 2021
According to business entity concept;
A company is distinguished from its proprietors/owners.
As a proprietor invest money into company,its is the responsibility of business (company) to return interest to him in the form of profits
Hence proprietor will be considered as creditor according to entity concept
Upvote | 2 Reply Answer this doubt
स्रोत : edurev.in