Saturday, December 7, 2013

Conceptual and Regulatory Framework of Accounting

Discuss the inventionual and regulatory framework of write up The thoughts of report ar the assumptions that guide the method of accounting system process. These concepts argon reinforced through the accounting standards that exist internation completelyy. That accountants need to observe the following basic principles; passageway Concern concept Accounting assumes that an entity volition continue to channelise indefinitely. That a commerce impart continue to operate for the foreseeable future. This concept implies that financial statements do non represent a sexual unions worth if its assets were to be liquidated, scarce rather that the assets will be used in future operations.  This concept in any case allows businesses to spread (amortize) the cost of an asset over its expected utilizable life.  Consistency concept Once an entity decides on one order of inform, that is, method acting of accounting for inventory, it must use that same method for all subsequent events.  This ensures that differences in financial position amongst reporting periods ar a result of changed in the operations and not to changes in the way items are accounted for. The method chosen should refund the most reliable picture of the business. However, a business sack up change its method of reporting but they must be careful and put a disperse of things in attachment first.
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Conservatism or prudence concept This requires understating rather than overstating tax (income) and outlay amounts that have a arcdegree of uncertainty.  The rule is to discover revenue when it is reaso nably certain and recognize expenses as soon! as they are reasonably possible.  The reasons for accounting in this manner are so that financial statements do not overstate the telephoners financial position.  Accounting chooses to err on the attitude of caution and protect investors from idealistic or overly affirmative results.  Realization concept Revenues are recognized when they are earned or realized. Realization is take for granted to occur when the seller receives cash or a assign to cash...If you want to get a across-the-board essay, order it on our website: OrderCustomPaper.com

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