Change in accounting policy may have a material effect on the items of financial statements." Explain the statement with the help of an example.
CA Foundation · Accounting · RTP · September 2026
Change in accounting policy may have a material effect on the items of financial statements." Explain the statement with the help of an example.
Suggested Answer and Working Notes:
Change in accounting policy may have a material effect on the items of financial statements. For example, cost formula used for inventory valuation is changed from weighted average to FIFO. Unless the effect of such change in accounting policy is quantified, the financial statements may not help the users of accounts.
Topics: Theoretical Framework
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