Banking · Accounting Standards
When an entity adopts a new accounting policy that has a material effect on its financial position, which of the following actions is mandatory according to AS 1 (Disclosure of Accounting Policies)?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The entity must obtain prior approval from the Finance Minister of India.
- 2The entity must disclose the nature of the change and its numerical impact on the financial statements.✓
- 3The entity must wait for five years before implementing any change in accounting policy.
- 4The entity must only disclose the change if it results in an increase in net profit.
Correct answer
The entity must disclose the nature of the change and its numerical impact on the financial statements.
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