The following points highlight the four main considerations which guide the selection of accounting principles. The considerations are: 1. Accurate Presentation 2. Conservatism 3. Profit Maximization 4. Income Smoothing. Consideration # 1. Accurate Presentation: One of the criteria for assessing the usefulness of accounting information is accuracy in presentation of the underlying events and transactions. This criterion may be used [...]
The following points highlight the three important users of accounting information. The users are: 1. Management 2. Users with Direct Financial Interest 3. Users with Indirect Financial Interest. User # 1. Management: Management is a group of people who are responsible for using the resources and managing the affairs of an entity to achieve the goals and objectives. Managers perform [...]
In this article we will discuss about descriptive and prescriptive accounting concepts. Larsen and Miller have expressed the opinion that sets of accounting concepts differ in how they are developed and used. In general, when concepts are intended to describe current practice, they are developed by looking at accepted specific practices, and then making some general rules to encompass them. [...]