A: Errors of principle do not affect the Trial Balance. R: Errors of principle involve recording a transaction in the wrong class of account. Choose the correct option.
A.A is true but R is false
B.Both A and R are true and R is the correct explanation of A
C.Both A and R are true but R is NOT the correct explanation of A
Explanation:
An error of principle (e.g., treating a capital expense as revenue) violates accounting rules but keeps the debit and credit amounts equal. Therefore, the Trial Balance still agrees. R correctly explains the nature of the error.
Explanation:
Discount columns in cash book are merely memorandum; total discount allowed and received are posted to respective ledger accounts, not individually.
Assertion (A): Under Ind AS 107, an entity must disclose information that enables users to evaluate the significance of financial instruments for its financial position. Reason (R): This includes disclosing the nature and extent of risks arising from financial instruments. Choose the correct option.
A.A is true but R is false
B.Both A and R are true and R is the correct explanation of A
C.A is false but R is true
D.Both A and R are true but R is NOT the correct explanation of A
Explanation:
Ind AS 107 requires extensive disclosures about financial instruments. The primary goal is to help users evaluate their significance, which inherently requires disclosing the nature and extent of risks (credit, liquidity, market) associated with them. R correctly explains A.
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