With regard to financial statements, name any five qualitative characteristics and elements.Aman started a business on 1st April 2025 with -…
CA Intermediate · Advanced Accounting · MTP · May 2026
With regard to financial statements, name any five qualitative characteristics and elements.Aman started a business on 1st April 2025 with - 24,00,000 represented by 1,20,000 units of 20 each. During the financial year ending on 31st March, 2026, he sold the entire stock for 30 each. In order to maintain the capital intact, calculate the maximum amount, which can be withdrawn by Aman in the year 2025-26 if Financial Capital is maintained at historical cost.
Suggested Answer and Working Notes:
(i) Qualitative Characteristics of Financial Statements: Understandability, Relevance, Comparability, Reliability & Faithful Representation Elements of Financial Statements: Asset, Liability, Equity, Income/Gain and Expense/Loss (ii) Particulars Financial Capital Maintenance at Historical Cost (₹) Closing equity (30x 1,20,000 units) 36,00,000 represented by cash Opening equity 1,20,000 units x 20 = 24,00,000 Permissible drawings to keep Capital intact 12,00,000 (36,00,000 - 24,00,000)
Topics: Framework for preparation and presentation of financial statements, AS 16
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