Bissoy.com
Doctors Medicines MCQs Q&A

  1. A and C only
  2. A, B and C only
  3. B and D only
  4. C, D and E only
4 views

1 Answers

Option 3 : B and D only

The correct answer is B and D only.

Accounting for price level changes - Accounting for price-level changes, commonly known as inflation accounting, is a financial reporting technique that, based on the assumption of stable currency, records the effects of inflation on the financial statements that a firm produces and publishes at the end of the fiscal year.

The following are the commonly accepted techniques for accounting for changes in price level - 

1.Current Purchasing Power Method(CPP) - 

  • The values of various items in the balance sheet and profit and loss account are converted using this procedure using any recognised and approved general price index.
  • This method accounts for changes in the value of products as a result of the overall price level, but it does not take individual item value changes into account.
  • For the conversion of historical expenses, the Reserve Bank of India's consumer price index or wholesale pricing index can be used.

2.Current Cost Accounting Method(CCA) - 

  • The creation of financial statements using the current values of individual things rather than the historical or original costs is the current cost accounting technique.
  • The current purchasing power technique can be replaced with the current cost accounting approach.
  • The financial statements created using this technique give more accurate information and distinguish between gains attributable to changes in price levels and profits made through business operations.
  • The strategy avoids overstating earnings and maintains capital because depreciation under CCA is provided on current costs.
  • The influence of holding monetary things on the business's finances in terms of earnings and losses is also underlined.
4 views

Related Questions

Match List I with List II: List I (Method) List II (Purchase consideration) (A) Lump-sum payment method (I) Calculated by adding up the total amount (money value) of existing shares, preference shares and cash received from the purchasing company for the shareholders of the vendor company. (B) Net Assets Method (II) On the basis of ratio in which the shares of the transferee company are to be exchanged for the shares of the transferor company. (C) Net Payment Method (III) The amount to be paid by the transferee company to transferor company for amalgamation of its business. (D) Swap Ratio Method (IV) Arrived at by adding the agreed value of assets taken over and deducting there from the agreed values of liabilities. Choose the correct answer from the options given below:?
1 Answers 7 Views
Which of the following distinction(s) is/are not correct between public issue and rights issue (A) In public issue, applications for shares are invited from the general public and in rights issue, the shares are offered to existing shareholders. (B) In public issue there is no question of any over-subscription and in rights issue the shares may be under subscribed or over subscribed leading to prorata allotment. (C) The price of public issue is generally less than the market price and in rights issue, the price is deliberately made less than the market price. (D) In a public issue, the communication of the issue is through prospectus or advertisements and in a rights issue the communication is between the company and the existing members of the company. Choose the most appropriate answer from the options given below:?
1 Answers 6 Views