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Why are accounting policies disclosed in financial statements even when standards are followed?
ABecause the standards prescribe a single fixed policy
BBecause it is not possible to prescribe a single set of policies for all enterprises
CTo increase the length of the report
DBecause tax authorities require it
Answer & Solution
Correct answer: B. Because it is not possible to prescribe a single set of policies for all enterprises
1. Step 1: Per Ch 1, "since it is not possible to prescribe a single set of policies for any specific accounting area that would be appropriate for all enterprises, it is not enough to comply with the standards and state that they have been followed. In other words, one must also disclose the accounting policies used".
2. Step 2: Hence the disclosure requirement.
3. Step 3: Hence (B) is correct.
_Source: ICAI BoS CA Inter Paper 1, Ch 1 "Introduction to Accounting Standards"_