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| 1. |
Production a factory had to stop for a week due to a labour strike . The owner estimated the loss of production and the likely loss of profit arising out of the situation . He directed the accountant to record the loss in the books of accoount . Is the owner correct in recording the likely loss ? Give reasons. |
| Answer» SOLUTION :No , the owner is not CORRECT beecause transaction and EVENTS are recorded in the books of account if they can be measured in money terms and on the BASIS of evidences . In the PRESENT case, evidence to the effect of loss or profit does not exist on the basis of which the owner can measure the loss in money terms | |