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mediumMCQCUET Accountancy 2022 8 Aug Shift 22026Accountancy
1 mark

Which one of the following is not true?

  1. A
    Financial statements are prepared on the basis of accounting principles and conventions.
  2. B
    Any changes in accounting principles or methods will affect the utility of the financial statements.
  3. C
    During the period of high inflation, the amounts associated with the items of balance sheet are adjusted to current price level.
  4. D
    Financial statements record only those transactions which can be expressed in monetary units only.

Solution & Step-by-step Explanation

Conventional financial statements are based on historical cost concept and ignore the effects of inflation. They are not automatically adjusted to the current price level.

Practice this question

Try it yourself before checking the explanation above.

Which one of the following is not true?
A
Financial statements are prepared on the basis of accounting principles and conventions.
B
Any changes in accounting principles or methods will affect the utility of the financial statements.
C
During the period of high inflation, the amounts associated with the items of balance sheet are adjusted to current price level.
D
Financial statements record only those transactions which can be expressed in monetary units only.

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