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CA Intermediate · Advanced Accounting · Framework for Preparation and Presentation of Financial Statements

Gomti Foods Ltd. reports in its financial statements for 2024-25 and 2023-24 figures prepared on the same accounting policies, and discloses the policies adopted. Which qualitative characteristic is mainly served by the consistent use of the same policies from year to year?

Comparability is the characteristic served. Using the same accounting policies in successive years lets users compare an entity's financial statements over time and spot trends in its position and performance, which is the main benefit of consistency and policy disclosure.

  1. AComparabilityCorrect
  2. BTimeliness
  3. CNeutrality
  4. DReliability through verifiability

Explanation

Consistent policies allow users to compare the entity's statements over time and identify trends in financial position and performance. Hence comparability is the characteristic served. Neutrality relates to freedom from bias, and timeliness to availability of information in time for decisions.

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