Financial Accounting

When changes in accounting policies are permitted?

Though ‘consistency’ is a fundamental accounting assumption, it does not imply that accounting policies adopted once cannot be altered ever in the future. Changes in accounting policies may be required sometime to maintain the quality and comparability of data.

Changes in accounting policies are permitted and justified in the following cases:

  1. To comply with accounting standards
  2. To ensure more appropriate accounting presentation of financial statements
  3. To comply with the law

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