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SSC Audit Tax Finance P-II QUESTION #6166
Question 1
Why is the 'Constant Rupee Approach' used in Financial Statement Analysis?
  • To calculate the precise tax liability
  • To adjust for the effects of inflation when comparing balance sheets over time✔️
  • To ensure the Double Entry Principle is maintained
  • To convert Market Value to Book Value
Correct Answer Explanation
Lesson 03 explains that this approach compares balance sheets at different times by making inflationary adjustments to account for the limitations of historical cost.