IAS 1 Presentation of Financial Statements
IAS 1 is the foundation of the IAS framework and sets out the overall requirements for the presentation of financial statements. It requires companies to present their financial statements in a way that is clear, concise, relevant, reliable, and comparable. IAS 1 specifies the overall criteria for financial statement presentation, as well as rules for […]
What Are 12 Accounting Concepts? – A Summary
Accounting Concepts are the underlying assumptions used to produce a business’s financial statements. The term “concept” refers to an idea or thought. Concepts are the fundamental assumptions and conditions that underpin accounting principles. There are 12 accounting concepts. These are explained below: Money Measurement Concept The money measurement concept (alternatively referred to as monetary measurement) emphasises that […]
When changes in accounting policies are permitted?
Though ‘consistency’ is a fundamental accounting assumption, it does not imply that accounting policies adopted once cannot be altered ever in the future. Changes in accounting policies may sometimes be required to maintain the quality and comparability of data. Changes in accounting policies are permitted and justified in the following cases: Notably, accounting policy changes […]
What are fundamental accounting principles?
Accounting is integral to any organization’s success, and fundamental accounting principles serve as a foundation for accurate financial reporting. Fundamental accounting principles are a set of rules that govern how financial information should be recorded, reported, and analyzed. These principles provide a standard framework for financial reporting, enabling businesses to convey their financial position to […]
Ethical Perspectives in the Accounting Profession
Accountants have a significant responsibility to the public. This responsibility exists because outside shareholders, creditors, employees, and others rely on financial statements in making various business decisions. Internal accountants are employed by businesses to prepare financial statements. These financial statements are then audited by an independent CPA company. Both internal accountants and external auditors are […]
Key Users of Financial Statements for Decision-Making
Financial statements are an essential source of financial information for a wide range of users and decision-makers. These statements provide a comprehensive overview of a company’s financial position, performance, and cash flows. But who are the various users of financial statements who rely on these accounting records prepared by accountants? Let’s talk about them in […]
What Are Operating and Financing Leases?
Leases are also generally categorized under operating leases and financing (or capital) leases with different accounting and financial effects. An operating lease is an agreement for rental of assets of short term wherein the lessee does not retain ownership and so is best for assets that will have a finite useful life. Conversely, a financing […]
What are the benefits of self-balancing systems?
Effective book-keeping is vital for companies to ensure accuracy and avoid discrepancies in their accounts. A self-balancing system is a sophisticated method of book-keeping that provides each ledger account with its own balanced records, minimizing the likelihood of errors and ease of reconciliation. This system is especially useful for large organizations with various departments, as […]
The role of auditors in a Limited Company
Auditors play a crucial role in public companies, and their responsibilities may vary depending on the company. In some cases, auditors may be responsible for checking financial statements and other reports to make sure they are accurate. Other times, auditors may be responsible for reviewing products or services offered by public companies to ensure they […]
Cost-Volume-Profit Analysis: Advantages and Disadvantages
Cost-Volume-Profit analysis is a financial management tool helping firms understand the relationship between costs, sales volume, and profitability. By analysing how changes in costs and sales levels affect a company’s profit, CVP analysis supports strategic decision-making related to pricing, cost control, product mix, and market expansion. In this post, you will learn about the disadvantages […]