Question

Inappropriate selection of the accounting policy decision may lead to _________.

• A. Overstating the financial position performance
• B. Over/understating the performance of financial position
• C. Overstatement of losses
• D. Understatement of profit

Answer 1

The correct option is B Over/understating the performance of financial position

Financial statements are prepared by selecting certain policies. A proper balance has to done while selecting an appropriate policies which are useful for better presentation of financial statement. Improper selection of accounting policy may lead to ambiguity in performance of financial position.