Question 1 (b)
Short notes: money measurement; prior period items
6 marks
- Time to write
- About 12 minutes
- Notes
- Crux notes
Question
Question 1 (b) · 6 marksWrite short notes on any two of these:
The money measurement assumptions
Prior period items
Data Analytics used in Accounting (2×3=6)
Reworded from the university paper; the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.
Before you write
Read off the question and its marks
Read from the question
- any twoAnswer any 2 of the 3, 3 marks each. Only 2 are marked: a third earns nothing.
- short notesA note opens with the meaning, then two or three key points. No long introduction.
What the paper leaves open
Topic (iii), data analytics in accounting, has no source among the prescribed texts we use, so the answer marks it as a gap and answers the other two, as the question allows.
Write it in this order
The parts stand alone: start with the one you are surest of.
- Read; underline the asks; jot your points 1 min
- 1 Money measurement: meaning, effect and limitation 3 marks 5 min
- 2 Prior period items: meaning, causes and treatment 3 marks 5 min
- Check: every ask answered, key terms underlined 1 min
Easy marks
- Each note opens with the meaning: a one-line definition, the quickest mark in each.
- Choose the ones you know best: each carries the same marks.
Short on time? A few lines on every part beat a full answer to one: each part is capped at its own marks.
Try it first. About 12 minutes for 6 marks. Write it out, then open the solution.
Solution
Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.
Two notes are written, as the question allows: (i) the money measurement assumption and (ii) prior period items. Topic (iii), data analytics in accounting, is not attempted: none of the prescribed texts we hold covers it.
(i) The money measurement assumption
Accounting records only those facts that can be expressed in terms of money. Events that cannot be measured in money, such as the skill of the staff, a dispute between managers or the loss of a key customer, are not recorded however important they are. Money gives a common unit, so very different assets (land, stock, debtors) can be added together. Its limit is that the value of money changes: the rupee of one year is treated as equal to the rupee of another, so inflation is ignored.
(ii) Prior period items
“Prior period items are income or expenses which arise in the current period as a result of errors or omissions in the preparation of the financial statements of one or more prior periods. The” (AS 5, para 4.3) errors may be mathematical mistakes, mistakes in applying accounting policies, misinterpretation of facts or oversight; a change in an accounting estimate is not a prior period item. They are normally included in the current year's net profit or loss, or shown after it, so that their effect on the current profit can be seen.
Where the 6 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Money measurement: meaning, effect and limitation | 3 |
| 2 | Prior period items: meaning, causes and treatment | 3 |
| Total | 6 |
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