​Question:

•Will there be a difference in the income statements for December and January under the accrual and cash bases of accounting?​

​Example

​•Company A doing business in retailed selling of electronic products. Last year, the company applies the “first in - first out” method in evaluating its inventory.

​

​What inventory costing method should be applied in the current year?

​Example

​•Due to the increase in selling volume, directors want to change evaluating method to Weighted - average to minimize accounting works.

​

​What should the accountant do?

​Thinking:

Why do we need to assume that the business is a going concern?​

​Example

A retailer commences business on 1 January and buys inventory of 20 washing machines, each costing $100. During the year he sells 17 machines at $150 each.

How should the remaining machines be valued at 31 December in the following circumstances?​

​Homework

​Pls at home, spend your time to read more about the other accounting concepts:

​- Business entity

​- Money measurement concept

​- Dual aspect concept

​- Realization concept

​- Materiality Concept