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(5 Marks) a. Reliable Limited sells goods on credit basis. At the end of the year, it has a total outstanding of Rs. 120
(5 Marks) a. Reliable Limited sells goods on credit basis. At the end of the year, it has a total outstanding of Rs. 120 million from its customers. The past experience shows that about 5% of the customers invariably default. What are your views on this? What is the accounting principle involved and briefly explain the same? (2 marks) a. Shivam Limited borrowed a sum of Rs.50 million from the State Bank of India on 1st August 2019 for a period of one year. The loan matured on 31st July 2020 and was duly repaid on due date with interest amounting to Rs.5 million. The company maintains its books on financial year basis i.e. 1st April to 31st March. In which accounting year the interest expenses should be recorded? Why? (3 marks)
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