CA Inter P1 · Chapter 1 · Question 1 of 8
Under the Framework for the Preparation and Presentation of Financial Statements issued by ICAI, information is said to possess a particular qualitative characteristic when it is free from material error and bias and users can depend upon it to represent faithfully what it purports to represent. This characteristic is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Reliability
Explanation
The Framework describes reliability as the quality of information being free from material error and bias and faithfully representing what it purports to represent. Relevance concerns the ability of information to influence economic decisions, comparability concerns consistency across periods and entities, and understandability concerns ease of comprehension by users with reasonable knowledge.
More Introduction to Accounting Standards, Framework and Applicability MCQs
- Q3Case: The board of Vasundhara Textiles Ltd passed a resolution on 15 March 20X1 to replace its dyeing machines during the next financial…
- Q4Case: Megh Traders started the year with net assets (equity) of ₹5,00,000 and closed the year with net assets of ₹6,40,000. During the…
- Q5Case: An entity had opening net assets of ₹8,00,000 and closing net assets of ₹9,20,000, with no capital introduced or withdrawn. The…
- Q6Within ICAI, which body is responsible for formulating Accounting Standards (AS) that are subsequently notified for companies under the…
- Q7Case: Sarthak Components Ltd qualifies as a Small and Medium-sized Company (SMC) under the Companies (Accounting Standards) Rules. Which…