Answered

- A bill for repairs of Azmie's private car was recorded in the books of his business.

1. Which accounting concept is not applied here?
2. How would you treat this item so that it complies with the above accounting concept?



Answer :

GinnyAnswer

Final answer:

The Matching Principle is not applied; repairs can be recorded as an increase in non-current assets and an accounts payable.


Explanation:

Accrual Basis of Accounting: In this scenario, the accounting concept that is not applied is the Matching Principle. The treatment for recording repairs of Azmie's private car in the business books to comply with accounting concepts would involve recognizing the transaction on the accrual basis by recording the repair expenses as an increase in non-current assets (such as equipment) and simultaneously recording an accounts payable for the same amount. This ensures accurate representation of the financial position of the business.


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