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The financian statements are maintained by using the Accrual Concept
Accounting standards strictly require accounting on Accrual Basis . Business transactions are recorded when they occur and not the related payments are received . This is accrual maethod.
(2) is the Correct Ans.
Financial Statements are prepared under the Accrual Concept of accounting which requires that income and expense must be recognized in the accounting period to which they relate rather than on cash basis.
Accrual Basis of accounting ensures that expenses are "matched" with the revenue earned in an accounting period. Accruals concepts is therefore very similar to matching principle.
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(2) Accrual Concept
All of the above concepts are used in preparing financial statements.
Option2 is the right answer.
1) Prudence Concept ..................................................
2) is correct. Financials always maintained by using accounting accrual concept.
