Saved Bookmarks
| 1. |
Explain any three of the following accounting convention : (i) Full Disclosure, (ii) Consistency, (iii) Materiality and (iv) Conservatism. |
|
Answer» SOLUTION :(i) According to the Convention of Full Disclosure , all significant information relating to theeconomic affairs of the entity should be reported in the FINANCIAL statementsin an understandable manner. (ii) According to the Convention of Consistency , accountingpractices once selected and ADOPTED should be consistently applied year after year. (iii) According to the Convention ofMateriality ,a transaction should be reported in the financial STATEMENTS on the basis of its materiality . An item is material if it can influence the decision of the user. (iv) According to the Convention of Conservatism , antiicipated losses should be accounted while anticipated incomes should not be accounted. |
|