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

Under AS 1, which of the following is a factor that should be considered in the selection and application of accounting policies so that the financial statements present a true and fair view?

AS 1 names prudence, substance over form and materiality as the major considerations in selecting and applying accounting policies. These help ensure the financial statements give a true and fair view. Items such as tax minimisation or matching competitors are not listed considerations.

  1. APrudence, substance over form and materialityCorrect
  2. BComparability, simplicity and tax minimisation
  3. CRelevance, brevity and uniformity with competitors
  4. DConservatism of tax authorities, timeliness and rounding

Explanation

AS 1 states that the major considerations governing the selection and application of accounting policies are prudence, substance over form and materiality. The other options contain items such as tax minimisation or uniformity with competitors which AS 1 does not list.

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