CA Foundation · Accounting · Theoretical Framework
Which of the following is a key objective of issuing Accounting Standards?
A key objective of Accounting Standards is to reduce alternative accounting treatments and thereby improve comparability and reliability of financial statements. They do not fix prices, determine tax liability, which follows tax law, or remove the requirement to maintain books of account.
- ATo reduce alternative accounting treatments and improve comparability of financial statementsCorrect
- BTo fix the selling price of goods of companies
- CTo compute income tax payable by every business
- DTo remove the need for maintaining books of account
Explanation
Standards aim to narrow the range of acceptable alternative treatments so that financial statements of different entities and periods can be compared. They do not set prices, compute tax, which is governed by tax law, or replace books of account.
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