Question

Selection of an accounting policy should be governed by _________.

• A. Prudence
• B. Materiality
• C. Substance over form
• D. All the three

Answer 1

Answer: (D)

All the three

The main consideration while selecting the accounting policies:

Prudence: Many transactions in business take place in uncertainty.

Materiality: FInancial statement must disclose all the material item.

Substance over form: Only the economic substance of the transactions and events must be recorded in financial statement.