Discussion
Omission of paise and showing the round figures in financial statements is based on ...............
Answer: C
Rounding off figures rests on the Materiality concept.
Materiality says that accounts should disclose items that would affect the decisions of users, and may ignore or simplify amounts too small to matter. Paise are immaterial in the accounts of a business of any size, so figures can be shown in round rupees, thousands or lakhs.
Conservatism concerns providing for losses but not anticipating gains, consistency means using the same methods from year to year, and realisation concerns when revenue is recognised; none of them justifies rounding.
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