Practicing Success
Which of the following plays an important role in the preparation of financial statements of a company? |
Personal Judgements Assumption of Money Measurement Both options 1 and 2 None of the above |
Both options 1 and 2 |
Postulates: Financial statements are prepared on certain basic assumptions (pre-requisites) known as postulates such as going concern postulate, money measurement postulate, realisation postulate, etc. Going concern postulate assumes that the enterprise is treated as a going concern and exists for a longer period of time. So the assets are shown on historical cost basis. Money measurement postulate assumes that the value of money will remain the same in different periods. |