Which of the following is NOT a feature of financial statements?

Not disclosing accounting policies

The correct answer is Option (4) → Not disclosing accounting policies

Financial statements are characterized by transparency and full disclosure. They must clearly state the accounting policies used (like depreciation method, valuation of inventory, etc.) to ensure comparability and reliability.

Not disclosing accounting policies → Not a feature, because disclosure of accounting policies is mandatory and essential for fair presentation.

• To provide information about the earning capacity of the business → Feature, as financial statements show profit and performance.

• To provide information about cash flows → Feature, as they help assess liquidity and cash movement.

• To judge effectiveness of management → Feature, as users analyze how efficiently management uses resources.