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CS Executive · Corporate Accounting and Financial Management · Introduction to Corporate Accounting

According to Ind AS 1, what is the effect of applying Ind ASs, with additional disclosure when necessary, on the financial statements of an entity?

Ind AS 1 says that applying Ind ASs, with additional disclosure where necessary, is presumed to result in financial statements that present a true and fair view of the financial position, financial performance and cash flows. It is a presumption rather than an absolute guarantee.

  1. AIt is presumed to result in financial statements that present a true and fair viewCorrect
  2. BIt guarantees that the financial statements will never be questioned by the auditor
  3. CIt removes the need for financial statements to present cash flows
  4. DIt is required only when the entity departs from the Conceptual Framework

Explanation

Ind AS 1 states that application of Ind ASs, with additional disclosure when necessary, is presumed to result in a true and fair view. It is a presumption, not a guarantee, so the 'never be questioned' option is wrong. Cash flows remain part of the true and fair view requirement.

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