Question

With respect to AS 5 (Net profit or loss for the period, prior period items and changes in accounting policies), which of the following statement is incorrect?

A Prior period items are income or expenses which arise in the current period as a result of errors or omissions in the preparation of the financial statements of one or more prior periods.

B Extraordinary items are income and expenses that arise from events or transactions that are clearly distinct from the ordinary activities of the enterprise and therefore are not expected to recur frequently or regularly.

C Accounting policies are the specific accounting principles and the methods of applying those principles adopted by an enterprise in the preparation and presentation of financial statements.

D This standard deal with tax implications of extraordinary items, prior period items, changes in accounting estimates and changes in accounting policies for which appropriate adjustments will have to be made depending on the circumstances.

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