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- 1 Marks
Question
Which of the following statements is/are correct?
(i) Materiality means that only items having a physical existence may be recognised as assets.
(ii) The substance over form convention means that the legal form of a transaction must always be shown in financial statements even if this differs from the commercial effect.
(iii) The money measurement concept means that only an item capable of being measured in monetary terms can be recognised in financial statements.
A. I
B. I, II and III
C. I and II
D. II and III
E. III
Answer
E. III
Explanation:
Only the statement about the money measurement concept is correct. The materiality concept does not restrict asset recognition to physical existence, and the substance over form convention focuses on the commercial effect, not just the legal form.
- Tags: Accounting Concepts, Materiality, Money Measurement, Substance Over Form
- Level: Level 1
- Uploader: Theophilus