A-LevelAccountingFinancial reporting and ethical considerations9706/12 · Oct/Nov 2024 · Q11 Mark

A business sells computers. When it values its inventory it excludes the value of the inventory that is more than one year old. This is because it may be obsolete. Which accounting principle does this demonstrate?

Agoing concern

Bhistorical cost

Cprudence

Drealisation

✓ Correct answer

C: prudence

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Topic: Financial reporting and ethical considerations, A-Level Accounting (syllabus 9706). Multiple choice, 1 mark.
Source: A-Level Accounting, Oct/Nov 2024 Paper 1 Variant 2, question 1.

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