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CA Intermediate · Advanced Accounting · AS 1 Disclosure of Accounting Policies

Narmada Steels Ltd. discloses its significant accounting policies as a note forming part of the financial statements. Which of the following describes the AS 1 requirement on where and how this should be presented?

AS 1 requires all significant accounting policies adopted in preparing financial statements to be disclosed, and they should form part of the financial statements, normally in one place. Mention only in the directors' report or only in the year of adoption does not satisfy the standard.

  1. APolicies may be scattered in the directors' report only
  2. BAll significant accounting policies should be disclosed in one place as part of the financial statementsCorrect
  3. COnly the policies that differ from those of competitors need disclosure
  4. DPolicies need be disclosed only in the first year of adoption and never afterwards

Explanation

AS 1 requires that disclosure of significant accounting policies form part of the financial statements and that they normally be shown in one place. Disclosure in the directors' report alone is not sufficient. Comparison with competitors or one-time disclosure is not the test.

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