Answer-Which of the following is not a fundamental accounting assumption as per AS-1?

Question

Accepted Answer

Under AS-1 Disclosure of Accounting Policies, there are only three recognized Fundamental Accounting Assumptions. These are assumptions that are traditionally followed in the preparation of financial statements and do not require specific disclosure if followed. These include Going Concern, Consistency, and Accrual.     Prudence is a conceptprinciple but not a fundamental assumption.             Going Concern- The business is assumed to continue its operations indefinitely and not go bankrupt or be liquidated in the near future. This assumption affects how assets and liabilities are valued and reported.          Consistency- Accounting policies and methods should be applied consistently from one accounting period to another, ensuring comparability of financial statements over time.          Prudence Conservatism- Accountants should exercise caution by recognizing all probable losses immediately but only recognizing gains when they are certain, to avoid overstating assets or income.          Accrual- Revenues and expenses are recorded when they are earned or incurred, not necessarily when cash is received or paid, to match income and related expenses in the same period.

Which of the following is not a fundamental accounting assumption as per AS-1?

Detailed Solution

More Financial System Questions

Hey! Ask a query

Please Register/Login