"Change in accounting policy may have a material effect on the items of financial statements." Explain the statement with the help of an example. [RTP Jan. 2025]
Options
A
B
C
D
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Theoretical FrameworkQ-2 | Accounting as a Measurement DisciplineQuestion 4647 of 110
All Questions Correct Answer
✅ Option — Correct Option
All Options:
- A
- B
- C
- D
Detailed Solution & Explanation
Change in accounting policy may have a material effect on the items of financial
statements. For example, cost formula used for inventory valuation is changed from
weighted average to FIFO. Unless the effect of such change in accounting policy is
quantified, the financial statements may not help the users of accounts.
UNIT – 6 (ACCOUNTING AS A MEASUREMENT DISCIPLINE – VALUATION PRINCIPLES, ACCOUNTING
ESTIMATES)
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