If a company changes its depreciation method from Straight Line to Written Down Value to manipulate profits, which accounting convention is violated? MCQ with Answer and Explanation

Question

If a company changes its depreciation method from Straight Line to Written Down Value to manipulate profits, which accounting convention is violated?

A. Conservatism

B. Full Disclosure

C. Consistency

D. Materiality

Answer: Option C

Solution (By JKSSB Mock Tests)

The convention of Consistency requires that accounting policies remain unchanged from one period to another to allow valid comparisons.

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Question #1

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The 'Engagement Letter' in audit is:

A. The audit programme

B. A letter of appointment of auditor

C. A written agreement between auditor and client detailing scope and terms of audit

D. Tax notice

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Correct Answer: Option C

Explanation:
Engagement letter formalises the audit engagement.

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Question #2

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A key challenge of Human Resource Accounting is:

A. Lack of standardized models to objectively value human capital

B. Excessive software cost

C. It reduces taxable income

D. It is banned by Ind AS

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Correct Answer: Option A

Explanation:
Valuing human beings as assets involves subjective assumptions about tenure, capability, and future value, lacking a universally accepted model.

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Question #3

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The 'Advance Authorisation' scheme under Foreign Trade Policy allows:

A. Tax holiday

B. Duty-free import of inputs for export production

C. Cash subsidy

D. Income tax exemption

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Correct Answer: Option B

Explanation:
Advance authorisation permits duty-free import of inputs that are physically incorporated in export product.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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