- 1 Marks
FA – May 2024 – L1 – SA – Q9 – Regulatory Environment of Accounting
Identifies the importance of recording transactions based on substance rather than legal form.
Question
Why is it important to record the substance of transactions rather than just their legal form in financial statements?
A. Legal principles are often complex and difficult to apply in accounting.
B. Financial statements must comply with tax regulations, not legal principles.
C. The legal form of transactions does not accurately represent their financial impact.
D. Recording transactions based on their legal form is easier and more straightforward.
E. Accountants prefer to use financial substance rather than legal form for simplicity.
Find Related Questions by Tags, levels, etc.
- Tags: Accounting principles, Financial Reporting, Substance Over Legal Form
- Level: Level 1
- Topic: Regulatory Environment of Accounting
- Series: MAY 2024
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