Short notes (any three of four)

Three notes are written: (i), (ii) and (iii).

(i) Events occurring after the balance sheet date. These are events, favourable or unfavourable, that happen between the balance sheet date and the date on which the financial statements are approved. They are of two kinds.

• Events that give further evidence of conditions already existing at the balance sheet date lead to adjustment of the assets and liabilities. AS-4 requires that adjustment where the event helps estimate amounts relating to conditions at that date, or shows that the going-concern assumption no longer holds. For example, a customer who becomes insolvent after the year end confirms a loss on a debt that existed at the year end.
• Events that do not relate to conditions at the balance sheet date (for example, a fire that destroys stock after the year end) do not change the figures. Where they are material changes affecting the financial position, AS-4 requires them to be disclosed in the report of the approving authority, with their nature and an estimate of their effect.

(ii) Fundamental accounting assumptions (AS-1). Three assumptions are so widely accepted that the financial statements need not state them; disclosure is required only when one is not followed.

• Going concern: the enterprise is taken to continue in business for the foreseeable future, with no intention or need to liquidate or to cut its operations down materially.
• Consistency: accounting policies are taken to stay the same from one period to the next.
• Accrual: income and expenses are recognised in the period to which they relate, whether the cash is received or paid in that period, an earlier one or a later one.

(iii) Accounting estimate. Many items cannot be measured exactly and are estimated with judgment. Examples are the useful life and residual value of an asset, the depreciation method, a provision for doubtful debts and the value of obsolete stock. When later information shows that an earlier estimate no longer holds, the change is a change in an accounting estimate, not a change of accounting policy. Its effect falls on the current period and, where relevant, on later periods, and its nature and effect are disclosed. AS-10 names residual values, useful lives and depreciation methods among such estimates for property, plant and equipment.

(iv) The impact of data analytics on accounting: documented gap, not answered. No prescribed text, study module or standard in this repository covers this topic, so any note on it would be unsourced. The question asks for any three, so the three notes above complete it.