Theoretical Framework-Accounting Policies (CA Foundation Principles of Accounting): Questions 1 - 9 of 9

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Question number: 1

» Theoretical Framework » Accounting Policies

Essay Question▾

Describe in Detail

What is the difference between accounting assumptions and accounting policies?

Explanation

The difference between accounting assumptions and accounting policies is as follows:

Distinction between accounting assumptions and accounting policies

Table of differences between accounting assumptions and accounting policies

Basis

Accounting assumptions

Accounting policies

Number

3 in number (Going concern, accrual and consistency)

No specific number

Disclosure requirement

Not required

Disclosure is

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Question number: 2

» Theoretical Framework » Accounting Policies

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In what cases can a firm bring about a change in its accounting policy?

Question number: 3

» Theoretical Framework » Accounting Policies

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What are the disclosure requirements in case of change in the accounting policy?

Explanation

  • Any changes brought about in the accounting policy have to be disclosed as per the AS 1 issued by the ICAI. The disclosure requirements are as follows:

  • A change in the accounting policy having material effect in the current or later period should be disclosed

  • The amount by which any

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Question number: 4

» Theoretical Framework » Accounting Policies

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What does AS 1 of accounting standard state about disclosure of accounting policy?

Question number: 5

» Theoretical Framework » Accounting Policies

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On what basis does a firm select a suitable accounting policy for itself?

Question number: 6

» Theoretical Framework » Accounting Policies

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What is meant by accounting Policy?

Explanation

  • Every enterprise adapts its own accounting principles and methods and applies the same in the preparation of its financial statements. Such accounting procedures and methods adopted by the enterprise is called as Accounting policies.

What is accounting policy?

What Is Accounting Policy?

Meaning of accounting policy with examples.

  • These accounting policies differ from organization

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Question number: 7

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How does a change in the accounting policy affect the financial statement?

Question number: 8

» Theoretical Framework » Accounting Policies

Essay Question▾

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State a few examples where different accounting policies may be used by different firms while accounting their business transactions.

Explanation

Every firm follows different accounting policies as their business may require. Some of the instances where different accounting policies are followed by different firms are as given below:

  • Depreciation, depletion and amortization methods

  • Construction expenditure

  • Foreign currency conversion

  • Stock valuation

  • Goodwill treatment

  • Investment valuation

  • Retirement benefits

  • Treatment of contingent liabilities

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Question number: 9

» Theoretical Framework » Accounting Policies

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Does a wrong selection of accounting policy mislead the users of the financial report? State reasons for your answer.

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