S1: Vouching is the examination of documentary evidence of transactions. R: Vouching ensures that transactions are authorized and properly recorded. Which statement(s) is/are correct?
Explanation:
Vouching is the primary audit procedure involving the inspection of vouchers (receipts, invoices) to verify the authenticity of transactions. It ensures transactions are authorized, accurate, and recorded. Both are correct.
Assertion (A): Under Ind AS 23, borrowing costs directly attributable to the acquisition of a qualifying asset must be capitalized. Reason (R): A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. 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 23 requires capitalization of borrowing costs for qualifying assets. A qualifying asset is defined precisely as one that takes a substantial period to be ready for use or sale. R correctly defines the term and explains the basis for capitalization.
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