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Question:
In each case below and having regard to your knowledge of Accounting Concepts, comment on and assess the validity of the accounting implications/practices to be adopted by these businesses:-
(i) Mr. Goldman is a very skilled and artistic Jeweller who has won various exhibition prizes. He considers himself to be the most important asset that his workshop could possess. Consequently, he has instructed his accountant to include his "knowledge and skill" as an Asset in the Balance Sheet of the business.
(ii) The Debtors figure in the books of "Electric Appliances Ltd." includes an amount of Rs 5,000 owed by one Mr. Jackson since some three years now. Various appeals have been made to him to settle the debt but to no avail. A final reminder was sent to him by post but the letter was returned to sender with the mention "Gone Away".
(iii) While preparing the Final Accounts of "Maxi Stone Crusher Ltd." for the year ended 30th June 2005, you read in the Newspapers that the License of this Stone Crushing Company will not be renewed after its present expiry date i.e. 30th September 2005 because the place where it is located has been declared a "Residential Zone".
B. Describe what do you understand by:
(i) A Revenue Centre; and (ii) A Cost Centre; (iii) An Investment Centre. and give an example in each case.
when asked to calculate return method given cash flow before depreciation how do you do it
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