Question and Answer for Advanced Accounting
REVISIONARY TEST PAPER
DECEMBER 2010
GROUP IV
DIRECTORATE OF STUDIES THE INSTITUTE OF COST AND WORKS ACCOUNTANTS OF INDIA
12, SUDDER STREET, KOLKATA-700 016
46
Revisionary Test Paper (Revised Syllabus-2008)
GROUP - IV
Paper-16 : ADVANCED FINANCIAL ACCOUNTING & REPORTING
DIRECTORATE OF STUDIES, THE INSTITUTE OF COST AND WORKS ACCOUNTANTS OF INDIA
Group-IV : Paper-16 : Advanced Financial Accounting & Reporting
47
FINAL EXAMINATION
(REVISED SYLLABUS - 2008)
GROUP - IV Paper-16 : ADVANCED FINANCIAL ACCOUNTING & REPORTING
Q1. Write short notes on the Advantages and disadvantages of setting of Accounting Standards. Answer 1. The Accounting Standards seek to describe the accounting principles, the valuation techniques and the methods of applying the accounting principles in the preparation and presentation of financial statements so that they may give a true and fair view. The ostensible purpose of the standard setting bodies is to promote the dissemination of timely and useful financial information to investors and certain other parties having an interest in companies’ economic performance. The setting of accounting standards has the following advantages: (i) Standards reduce to a reasonable extent or eliminate altogether confusing variations in the accounting treatments used to prepare financial statements. (ii) There are certain areas where important information are not statutorily required to be disclosed. Standards may call for disclosure beyond that required by law. (iii) The application of accounting standards would, to a limited extent, facilitate comparison of financial statements of companies situated in different parts of the world and also of different companies situated in the same country. However, it should be noted in this respect that differences in the institutions, traditions and legal systems from one country to another give rise to differences in accounting standards practised in different countries. However,
DECEMBER 2010
GROUP IV
DIRECTORATE OF STUDIES THE INSTITUTE OF COST AND WORKS ACCOUNTANTS OF INDIA
12, SUDDER STREET, KOLKATA-700 016
46
Revisionary Test Paper (Revised Syllabus-2008)
GROUP - IV
Paper-16 : ADVANCED FINANCIAL ACCOUNTING & REPORTING
DIRECTORATE OF STUDIES, THE INSTITUTE OF COST AND WORKS ACCOUNTANTS OF INDIA
Group-IV : Paper-16 : Advanced Financial Accounting & Reporting
47
FINAL EXAMINATION
(REVISED SYLLABUS - 2008)
GROUP - IV Paper-16 : ADVANCED FINANCIAL ACCOUNTING & REPORTING
Q1. Write short notes on the Advantages and disadvantages of setting of Accounting Standards. Answer 1. The Accounting Standards seek to describe the accounting principles, the valuation techniques and the methods of applying the accounting principles in the preparation and presentation of financial statements so that they may give a true and fair view. The ostensible purpose of the standard setting bodies is to promote the dissemination of timely and useful financial information to investors and certain other parties having an interest in companies’ economic performance. The setting of accounting standards has the following advantages: (i) Standards reduce to a reasonable extent or eliminate altogether confusing variations in the accounting treatments used to prepare financial statements. (ii) There are certain areas where important information are not statutorily required to be disclosed. Standards may call for disclosure beyond that required by law. (iii) The application of accounting standards would, to a limited extent, facilitate comparison of financial statements of companies situated in different parts of the world and also of different companies situated in the same country. However, it should be noted in this respect that differences in the institutions, traditions and legal systems from one country to another give rise to differences in accounting standards practised in different countries. However,