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A Change in accounting Policy is justified
- a)To comply with accounting standard.
- b)To ensure more appropriate presentation of the financial statement of the enterprise
- c)To comply with law.
- d)All of the above.
Correct answer is option 'D'. Can you explain this answer?
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Most Upvoted Answer
A Change in accounting Policy is justifieda)To comply with accounting ...
Explanation:
Compliance with Accounting Standard:
- Changes in accounting policy may be justified to comply with the requirements of accounting standards issued by the relevant accounting standard-setting bodies.
- Accounting standards are established to ensure consistency, comparability, and transparency in financial reporting. Therefore, it is crucial for enterprises to adhere to these standards to provide reliable and relevant information to stakeholders.
Appropriate Presentation of Financial Statements:
- A change in accounting policy may be necessary to ensure a more appropriate presentation of the financial statements of the enterprise.
- The presentation of financial statements should reflect the true and fair view of the financial position, performance, and cash flows of the entity. Therefore, if the existing accounting policy does not result in a faithful representation of the financial information, a change may be warranted.
Compliance with Law:
- In some cases, changes in accounting policy may be required to comply with the legal requirements imposed by regulatory authorities.
- Legal regulations may dictate specific accounting treatments for certain transactions or events, and failure to comply with these laws could result in penalties or legal consequences.
Conclusion:
In conclusion, a change in accounting policy may be justified for various reasons, including compliance with accounting standards, ensuring appropriate presentation of financial statements, and adherence to legal requirements. It is essential for enterprises to assess the impact of such changes on their financial reporting and to communicate them transparently to stakeholders.
Compliance with Accounting Standard:
- Changes in accounting policy may be justified to comply with the requirements of accounting standards issued by the relevant accounting standard-setting bodies.
- Accounting standards are established to ensure consistency, comparability, and transparency in financial reporting. Therefore, it is crucial for enterprises to adhere to these standards to provide reliable and relevant information to stakeholders.
Appropriate Presentation of Financial Statements:
- A change in accounting policy may be necessary to ensure a more appropriate presentation of the financial statements of the enterprise.
- The presentation of financial statements should reflect the true and fair view of the financial position, performance, and cash flows of the entity. Therefore, if the existing accounting policy does not result in a faithful representation of the financial information, a change may be warranted.
Compliance with Law:
- In some cases, changes in accounting policy may be required to comply with the legal requirements imposed by regulatory authorities.
- Legal regulations may dictate specific accounting treatments for certain transactions or events, and failure to comply with these laws could result in penalties or legal consequences.
Conclusion:
In conclusion, a change in accounting policy may be justified for various reasons, including compliance with accounting standards, ensuring appropriate presentation of financial statements, and adherence to legal requirements. It is essential for enterprises to assess the impact of such changes on their financial reporting and to communicate them transparently to stakeholders.
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A Change in accounting Policy is justifieda)To comply with accounting standard.b)To ensure more appropriate presentation of the financial statement of the enterprisec)To comply with law.d)All of the above.Correct answer is option 'D'. Can you explain this answer?
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