Question : Choose which of the following statements is not true.
Option 1: There may be variations in accounting practices followed by different firms, a meaningful comparison of their financial statements is not possible.
Option 2: Window dressing refers to the presentation of a better financial position than what it actually is by manipulating the books of account.
Option 3: Financial analysis does not identify symptoms of the problems.
Option 4: All of the above
Correct Answer: Financial analysis does not identify symptoms of the problems.
Solution : Answer = Financial analysis does not identify symptoms of the problems
Although financial analysis can spot problems, it cannot diagnose them; instead, management must find a solution to address the symptoms. Hence, the correct option is 3.
Question : Assertion A: - For inter-firm comparison, it is necessary that accounting practices followed by the firms do not vary significantly. As there may be variations in accounting practices followed by different firms, a meaningful comparison of their financial statements is not
Question : Assertion A :- Price level changes and the purchasing power of money are inversely related. A change in the price level makes analysis of financial statements of different accounting years invalid.
Reason R :- Accounting records ignore changes in the value of
Question : Statement 1: In management accounting, data from cost accounting and financial accounting are both used. Statement 2: Therefore, a suitable system is required to combine cost accounts and financial accounts.
Question : The computerised accounting system refers to -
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