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Which accounting principle makes it easy to make comparisons in financial statements for two consecutive years because of uniformity in currency?
The accounting principle that facilitates easy comparisons in financial statements across consecutive years due to uniformity in currency is the Monetary Unit Assumption. This principle stipulates that financial transactions and events are recorded in a consistent currency, allowing stakeholders to analyze performance and financial position over time without the complications of inflation or varying currency values. This uniformity enhances the clarity and relevance of financial reporting.
Explain the term accounting cycle why is it cycle?
Series of steps in recording an accounting event from the time a transaction occurs to its reflection in the financial statements; also called bookkeeping cycle. The order of the steps in the accounting cycle are: recording in the journal, posting to the ledger, preparing a trial balance, and preparing the financial statements.Its is an cycle because when the financial statements are made at the end of the year and after the closing of the financial year u have to start ur business again for the new financial year. So everything u do repeats again. Hence, it is a cycle. Hope it answered the question.
Why Accounting standard are unnecessary for the purpose of regulating financial statements?
Accounting standards may be unnecessary in the sense that preparing financial statements is seen as a legal requirement not one that should always be bound by the accounting principles. It isa priority to follow the rules stated by the law even if it may not agree with the known standard.
Why are there no debit or credit columns on financial statements?
because the inside column on financial statements is used for subtotaling
Why an independent auditor is asked to express an opinion on the fair presentation of financial statements?
An independent auditor is asked to express an opinion on the fair presentation of financial statements because a company may not be objective with respect to its own financial statements.
Why is is difficult to get KFC financial report or financial statements?
Because they are owned by Yum! Brands, and so the financial statements will usually be under that company as a whole. It is hard to find the individual reports from brands that are owned by bigger companies.
On which financial statements can you find unearned revenue?
The keyword is "Unearned", because it is unearned it is a liability until after it is earned and is listed as such. Therefore, Unearned Revenue will be listed on financial statements that include "Liabilities".
The estimate based on sales method violates the matching principle?
The estimate based on the sales method can violate the matching principle because it may recognize revenue without corresponding expenses being recorded in the same period. This principle requires that expenses be matched with the revenues they help generate to accurately reflect a company's financial performance. If revenue is recognized prematurely or without aligning associated costs, it can lead to misleading financial statements and distort the true profitability of the business during that period. Thus, adherence to the matching principle is crucial for accurate financial reporting.
What are the disadvantages of consolidated financial statements?
Combining financial statements could be a disadvantage because you cannot see the details that give you the strengths of the company. If you have separate financial statements for the parent and subsidiaries then you can break down a more meticulous analysis for each department and therefore see the basis and solidarity of the company
Importance of accounting standards?
Financial statements are prepared to summarize all business activities by an enterprise during an accounting period in monetary terms & report financial outcomes in terms of performance, status of assets, liabilities & flow of cash. These business activities vary from one enterprise to other on one hand and size & volume of business on the other hand. To compare the financial statements of various reporting enterprises poses some difficulties because of the divergence in the methods and principles adopted by these enterprises in preparing their financial statements. In order to make these methods and principles uniform, comparable, transparent, establish accountability and bring true & fair view of Financial Statement - Accounting Standards are evolved.
Why ledger Called the book of final entry?
The ledger is referred to as the "book of final entry" because it is where all transactions are ultimately recorded after being initially logged in the journals. It consolidates and organizes these transactions by account, providing a comprehensive view of an entity's financial position. This final entry allows for accurate financial reporting and analysis, serving as the primary source for preparing financial statements.
Should financial statements be capitalised?
Financial statements should not be capitalized. Capitalization refers to recording a cost or expense as an asset on the balance sheet, which can distort the financial position of a company. Financial statements should accurately reflect the company's financial performance and position through proper accounting principles.
