Which of the following points out the nature of financial statements?(i) Financial statements are prepared on the basis of recorded facts.(ii) Certain accounting conventions are followed while preparing financial statements.(iii) Financial statements are prepared on certain basic assumptions (pre-requisites) known as postulates.(iv) Facts and figures presented through financial statements are based on personal opinion, estimates and judgements.a)Only(i)b)(i)and(ii)c)(i), (ii) and (iii)d)(i), (ii), (iiii) and (iv)Correct answer is option 'D'. Can you explain this answer?

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Which of the following points out the nature of financial statements?
(i) Financial statements are prepared on the basis of recorded facts.
(ii) Certain accounting conventions are followed while preparing financial statements.
(iii) Financial statements are prepared on certain basic assumptions (pre-requisites) known as postulates.
(iv) Facts and figures presented through financial statements are based on personal opinion, estimates and judgements.

a)
Only(i)
b)
(i)and(ii)
c)
(i), (ii) and (iii)
d)
(i), (ii), (iiii) and (iv)

Correct answer is option 'D'. Can you explain this answer?

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Which of the following points out the nature of financial statements?(...

Nature of Financial Statements

Financial statements are crucial documents that provide information about the financial position and performance of a business. They are prepared following certain principles and conventions to ensure accuracy and consistency.

Points highlighting the nature of financial statements:

- Recorded Facts:
Financial statements are prepared based on recorded facts. These facts are derived from the financial records of the business, such as transactions, receipts, and payments. The information presented in financial statements should be reliable and verifiable.

- Accounting Conventions:
Certain accounting conventions, such as the historical cost convention and the going concern concept, are followed while preparing financial statements. These conventions help in providing a consistent and fair representation of the financial position of the business.

- Basic Assumptions:
Financial statements are prepared based on certain basic assumptions known as postulates. These assumptions include concepts like accrual basis accounting, consistency, and materiality. Adhering to these assumptions helps in maintaining the integrity and comparability of financial statements.

- Subjectivity in Reporting:
While financial statements are based on recorded facts, there is also an element of subjectivity involved. Facts and figures presented in financial statements may be influenced by personal opinions, estimates, and judgments made by the management. This subjectivity should be disclosed in the financial statements to provide transparency to the users.

Therefore, the nature of financial statements encompasses a mix of recorded facts, accounting conventions, basic assumptions, and subjective judgments, all aimed at providing accurate and reliable information to stakeholders.

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Which of the following points out the nature of financial statements?(i) Financial statements are prepared on the basis of recorded facts.(ii) Certain accounting conventions are followed while preparing financial statements.(iii) Financial statements are prepared on certain basic assumptions (pre-requisites) known as postulates.(iv) Facts and figures presented through financial statements are based on personal opinion, estimates and judgements.a)Only(i)b)(i)and(ii)c)(i), (ii) and (iii)d)(i), (ii), (iiii) and (iv)Correct answer is option 'D'. Can you explain this answer?

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