The correct answer is: C. present a true and fair view of its state of affairs and profit or loss.
An accounting policy is a set of principles, methods, and practices that an entity uses to prepare and present its financial statements. The objective of financial reporting is to provide information that is useful to users in making economic decisions. This information should be relevant, reliable, comparable, and understandable.
A concern should select an accounting policy that enables it to present a true and fair view of its state of affairs and profit or loss. This means that the financial statements should reflect the entity’s financial position, financial performance, and cash flows in a manner that is accurate, complete, and unbiased.
The other options are not correct because they are not the primary objective of financial reporting. Option A is about paying the proper amount of income tax. This is an important consideration, but it is not the primary objective of financial reporting. Option B is about calculating the correct amount of cash in hand. This is also an important consideration, but it is not the primary objective of financial reporting.
In conclusion, the correct answer is: C. present a true and fair view of its state of affairs and profit or loss.