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If nothing is written in the financial statements about the fundamental accounting assumptions, then it could be presumed that:-
- a)They have not been followed
- b)They have been followed
- c)They have been followed to some extent
- d)None of the above
Correct answer is option 'B'. Can you explain this answer?
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If nothing is written in the financial statements about the fundamenta...
Fundamental Accounting Assumptions
Fundamental accounting assumptions are the basic principles on which the whole accounting system is based. These assumptions help in the preparation of financial statements that are reliable and meaningful. There are three fundamental accounting assumptions:
1. Going Concern Assumption: This assumption states that the company will continue to operate in the foreseeable future.
2. Consistency Assumption: This assumption states that the company will use the same accounting methods and procedures from one accounting period to another.
3. Accruals Assumption: This assumption states that financial transactions should be recorded in the accounting period in which they occur, rather than when the cash is received or paid.
Presumption when nothing is written in the financial statements
If nothing is mentioned about the fundamental accounting assumptions in the financial statements, it is presumed that the assumptions have been followed. This is because these assumptions are considered to be so fundamental that they are assumed to have been followed unless explicitly stated otherwise.
Therefore, option B is the correct answer as it states that the fundamental accounting assumptions have been followed when nothing is mentioned about them in the financial statements. It is important to note that the financial statements should explicitly state if any of the fundamental accounting assumptions have not been followed.
Fundamental accounting assumptions are the basic principles on which the whole accounting system is based. These assumptions help in the preparation of financial statements that are reliable and meaningful. There are three fundamental accounting assumptions:
1. Going Concern Assumption: This assumption states that the company will continue to operate in the foreseeable future.
2. Consistency Assumption: This assumption states that the company will use the same accounting methods and procedures from one accounting period to another.
3. Accruals Assumption: This assumption states that financial transactions should be recorded in the accounting period in which they occur, rather than when the cash is received or paid.
Presumption when nothing is written in the financial statements
If nothing is mentioned about the fundamental accounting assumptions in the financial statements, it is presumed that the assumptions have been followed. This is because these assumptions are considered to be so fundamental that they are assumed to have been followed unless explicitly stated otherwise.
Therefore, option B is the correct answer as it states that the fundamental accounting assumptions have been followed when nothing is mentioned about them in the financial statements. It is important to note that the financial statements should explicitly state if any of the fundamental accounting assumptions have not been followed.
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If nothing is written in the financial statements about the fundamental accounting assumptions, then it could be presumed that:-a)They have not been followedb)They have been followedc)They have been followed to some extentd)None of the aboveCorrect answer is option 'B'. Can you explain this answer?
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