(a) State with reasons, whether the following statements are True or False: (i) Matching concept is based on accrual concept. (ii) Customers of…

(i) True: Matching concept is based on accrual concept as it considers the occurrence of expenses and income and do not concentrate on actual inflow or outflow of cash. (ii) False: Customers are concerned with the stability and profitability of the enterprise because their functioning is dependent on the supply of goods. Hence customers of business are users of accounts prepared by business. (iii) False: Under inflationary conditions, LIFO and weighted average will not show lowest value of cost of goods sold. (iv) False: The redemption of preference shares can be done either from the proceeds of fresh issue of shares or by capitalisation of undistributed profit or combination of both. But the proceeds from issue of debentures cannot be utilised for the purpose of redemption of preference shares. (v) True: Book-keeping and accounting are different from each other. Book-keeping is the recording phase while accounting is concerned with summarizing phase of an accounting system. Book keeping provides necessary data for accounting and accounting starts where book keeping ends. (vi) True: Since it classifies all the amounts related to a particular account and then it is used as the base for preparing the trial balance, a ledger is also known as principal books of accounts.