Skip to content

'Freedom to… (Class 12 Accountancy SQP 2023-24, Q27a)

questionbuddy.in/q/cbse-12-accountancy-2023-24-sqp-q27a-freedom-method-depreciation-refers-limitation

AccountancyCBSE Class 12 · Sample paper, session 2023-24 · 1 mark · MCQ

CBSE Class 12 Accountancy sample paper 2023-24: question 27(a)

From the official CBSE sample question paper for 2023-24, section B-I, question 27(a), for 1 mark. Try it first; the hints and our step-by-step solution are below.

Q27(a) · 1 mark · MCQAnalysis of Financial Statements

'Freedom to Choose of method of depreciation' refers to which limitation of financial statement analysis.

  1. (A)Historical analysis.
  2. (B)Qualitative aspect ignored.
  3. (C)Not free from bias.
  4. (D)Ignore Price level Changes.

Source: official sample paper from cbseacademic.nic.in (PDF). See it in the full Sample paper 2023-24.

Hints

Open one hint at a time and try again before the next.

Hint 1

Who chooses the depreciation method, and on what basis?

Hint 2

Judgement in accounting choices introduces personal bias.

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. The analyst's results depend on accounting policies the firm chose, such as the method of depreciation, which reflect personal judgement.

  2. This is the limitation that financial statement analysis is not free from bias. Option (C).

    1 mark

Answer: (C) Not free from bias.

Where the marks are

  • Choice of depreciation method makes the statements judgement-based (1 mark)

Revise the chapter

Practise this chapterBoard-style questions from Analysis of Financial Statements, one at a time, marked against the answer key and marking points.Back to the full paperSample paper 2023-24: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.