company prepares accounts sometimes on cash basis ,
sometimes on accural basis
A)TRUE B)FALSE C)SOMETIMES TRUE D)SOMETIMES FALSE
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Answer Posted / pari
As per the accounting guidleines, a company has to follow
one of the two basis year after year. It could be accrual
Or on actual/Cash basis. Whichever method they choose, they
need to follow it year after another.
It though has an option to change his method/procedure.But
then in such a scenario, the company has to provide the
reasoning and the audit team should also agree to the
reasonning. Then only, such a change is acceptable.
The basis for this is simple, if a company every year
changes the procedure/method its stakeholders can get mis-
guided and will not be able to follow the company position.
To have the buying of its stakeholders, company has to be
very careful and correct in its reportings.
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