Read the following text:
The American Institute of Certified Public Accountants states the nature of financial statements as, “the statements prepared for the purpose of presenting a periodical review of report on progress by the management and deal with the status of investment in the business and the results achieved during the period under review. They reflect a combination of recorded facts, accounting principles and personal judgements”. Thus, financial statements are the summarized reports of recorded facts and are prepared the following accounting concepts, conventions, postulates, accounting policies, accounting standards and requirements of Law. Based on the above, answer the following questions:
1. While, preparing statement of profit and loss the revenue is included in the sales of the year in which the sale was undertaken even though the sale price may be received over a number of yea₹ This is based on which postulates of accounting?
a) Going concern concept
b) Realization
c) Money measurement
d) Materiality
2. Small items like pencils, pens, postage stamps, etc.are named as stationery and are treated as expenditure in the year in which they are purchased even though they are assets in nature. This is based on the principle of
a) Going concern concept
b) Realisation
c)Money measurement
d) Materiality
3. Every company registered under The Companies Act 2013 shall prepare its balance sheet, statement of profit and loss and notes to account thereto in accordance with the manner prescribed by Companies Act, 2013 to harmonise the disclosure requirement with the accounting standards and to converge with new reforms as per
a) Schedule VI, Part I& II of Companies Act 2013
b) Schedule III, Part I &IIof Companies Act 2013
c) The provisions of Memorandum of Association
d) As per Table F of Companies Act 2013.
4. Balance sheet and Statement of Profit & Loss are supported by Notes to Accounts.
What do toy mean by Notes to Accounts?
a) Details of items given in the Balance sheet and Statement of Profit & Loss
b) Abstract of Memorandum of Association of a company
c) Provisions of Table F of Companies Act 2013
d) Provisions of Companies Act 2013
