A-LevelAccountingThe accounting cycle9706/12 · May/June 2010 · Q51 Mark

A business obtained a machine by means of a hire purchase agreement. It showed the machine in its balance sheet at the cash price of $30 000 although only $10 000 has been repaid. Which accounting principle is involved?

Aaccruals

Bmateriality

Cprudence

Dsubstance over form

✓ Correct answer

D: substance over form

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Topic: The accounting cycle, A-Level Accounting (syllabus 9706). Multiple choice, 1 mark.
Source: A-Level Accounting, May/June 2010 Paper 1 Variant 2, question 5.

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