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What factors related to the industry must be considered in the preparation of prospective financial business statements?
Is the industry one in which companies are very competitive?Are competitive industries emerging?Is obsolescence emerging within the industry?Are there regulatory considerations and requirements?
What is a balancing figure?
A balancing figure is used in accounting to reconcile discrepancies between accounting records, typically found during the preparation of financial statements. It represents the difference between the debits and credits in an account, which must be identified and resolved to ensure that the financial statements are accurate.
How is materiality determined?
Materiality is typically determined by assessing whether information has the potential to significantly impact the decisions of users of financial statements. Factors considered include the nature and size of the item, its potential impact on financial statements, and its relevance to users. Materiality thresholds are often established based on quantitative benchmarks or professional judgment.
What is articulation and how financial statement articulate?
Articulation refers to the ability of financial statements to connect and flow together seamlessly. In the context of financial statements, articulation means that the information presented in each statement is consistent with and supported by the information in the other financial statements. For example, the net income figure in the income statement should be carried over to the retained earnings section of the balance sheet, ensuring that the financial statements are coherent and accurate.
When do you know if the partner is solvent?
You can determine if a partner is solvent by reviewing their financial statements, credit reports, and cash flow projections. A partner is typically considered solvent if they have more assets than liabilities and can meet their financial obligations on time. It's important to conduct due diligence and assess their financial health before entering into any partnership or business arrangement.
What cost elements of the entity's doing business must be considered in the preparation of prospective financial statements?
payroll and benefits, needed employees, raw materials, products the entity sells, freight or shipping, and advertising.
What factors related to the economy must be considered in the preparation of prospective financial business statements?
What are the economic conditions in the country?What are critical economic trends?Is the economy inflationary, deflationary, or stable?What is the trend with regard to labor availability?
The output of financial accounting is?
The output of the financial accounting is preparation of financial statements.
What factors related to the industry must be considered in the preparation of prospective financial business statements?
Is the industry one in which companies are very competitive?Are competitive industries emerging?Is obsolescence emerging within the industry?Are there regulatory considerations and requirements?
Why are accounting standards important for the preparation of financial statements?
For comparability.
Who is responsible for preparation and integrity of the financial statements?
board of directors
What factors related to the market must be considered in the preparation of prospective financial business statements?
What are the trends in business or consumer demand related to the services or goods being sold by the entity?Are competitive companies emerging, perhaps with new or different products?Is unique marketing required?Are there pricing developments to be fact
What is account concepts?
Accounting concept are customs and tradition which are used as a guide for preparation of financial statements.
What si accounting standard?
Accounting Standards are the statements of code of practice of the regulatory accounting bodies that are to be observed in the preparation and presentation of financial statements.
Why is it important to adopt a consistent basis for the preparation of financial statement?
Comparability. It is important to allow users of financial statements to compare statements in order to identify trends within an industry or entity and to assist the relative performance of a company across time and across a specific industry. See IFRS: Frame work for the Preparation and Presentation of Financial Statements (A39- 42) Further as the basis by which the entity prepares its financial statements needs to be disclosed ( And changes in policy elaborated upon) it also inhibits adopting favourable accounting policies on a whim in order mislead users of financial statements
What does compilation of prospective financial statements by public accountants involve?
the service of preparing the statements in whole or part from information and significant assumptions provided by the responsible party, usually a member of management
Why is a regulatory framework necessary?
Regulatory framework is necessary for the preparation of Financial statements. - Financial statements are used by investors, lenders and customers (to name but few) and must be helpful for those stakeholders for making decisions. - Statements should be comparable and provide basic information.
