- 11 Marks
FR – NOV 2016 – L2 – Q2c – Conceptual Framework for Financial Reporting
Question tests understanding of capital maintenance concepts and their practical application in profit measurement under different concepts.
Question
i. The conceptual framework states that there are two concepts of capital. Explain these two concepts. (4 Marks)
ii. Perfect World Limited commenced business on January 1, 2015 with a single item of inventory which costs N120,000. During the year it sold the item for N180,000 in cash. Also, during the year, general inflation was 10% but the inflation specific to the item was 12%. Calculate the profit under each concept of capital maintenance and show the effect on the Equity of the Company. (7 Marks)
Find Related Questions by Tags, levels, etc.
Report an error