CSEET · Fundamentals of Accounting · Basic Concepts and Principles of Accounting
The ICAI Framework says that the selection of measurement bases and the concept of capital maintenance determines:
The choice of measurement bases and of the capital maintenance concept determines the accounting model used to prepare the financial statements. Different models have different degrees of relevance and reliability, so management must seek a balance between them.
- AThe accounting model used in preparing the financial statementsCorrect
- BThe rate of income tax on the enterprise
- CThe number of directors on the board
- DThe date on which the financial year ends
Explanation
The Framework states that selecting measurement bases and the concept of capital maintenance determines the accounting model used. Different models show different degrees of relevance and reliability, and management must balance the two. The other options are unrelated to this selection.
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