"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]
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Theoretical FrameworkQ-2 | Accounting as a Measurement DisciplineQuestion 4980 of 110
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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)
About This Chapter: Theoretical Framework
Paper
Paper 1: Accounting
Weightage
5-10%
Key Topics
Policies, Standards (Ind AS), Vocabulary
This chapter covers Policies, Standards (Ind AS), Vocabulary and is part of Paper 1: Accounting in the CA Foundation exam.
View Official ICAI SyllabusExam Strategy Tip
This topic carries 5-10% weightage. Focus on understanding core concepts rather than memorizing.
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