Skip to content

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

The financial statements of Kaveri Textiles Ltd. do not comply with a notified accounting standard. Under section 129 of the Companies Act, 2013, what must the company do?

The company must disclose in its financial statements the deviation from the accounting standard, the reasons for the deviation, and the financial effects, if any, arising from it. Partial disclosure, such as giving only the amount, does not satisfy the requirement of section 129(5).

  1. ADisclose the deviation, the reasons for it and the financial effects, if any, arising out of itCorrect
  2. BDisclose only the financial effect in rupees, without giving any reasons
  3. CSeek prior approval of the Registrar of Companies before adopting the financial statements
  4. DDisclose nothing, if the auditor considers the deviation immaterial

Explanation

Section 129(5) requires a company whose financial statements do not comply with the accounting standards to disclose the deviation, the reasons for it and the financial effects, if any. Disclosing only the effect omits two required elements. No prior Registrar approval is prescribed.

Did you get it right without looking?

One question tells you little. A timed set on Introduction to Corporate Accounting shows your real accuracy, how long you take and where you lose marks.

Practise Introduction to Corporate AccountingFree diagnostic mock

More Introduction to Corporate Accounting questions