Meaning:
Accounting policies refer to specific accounting principles and methods of applying these principles adopted by the enterprise in the preparation and presentation of financial statements.
The areas wherein different accounting policies are frequently encountered can be given as follows:
1. Methods of depreciation, depletion and amortisation
2. Valuation of inventories
3. Valuation of investment
Selection of Accounting Policies:
Choice of accounting policy is an important policy decision which effects the performance measurement as well as financial position of the business entity.
Three major characteristics which should be considered for the purpose of selection and application of accounting policies which is Prudence,Substance over from,and Materiality.
The basis for selecting accounting policies can be shown in the following chart as:
Accounting policies refer to specific accounting principles and methods of applying these principles adopted by the enterprise in the preparation and presentation of financial statements.
The areas wherein different accounting policies are frequently encountered can be given as follows:
1. Methods of depreciation, depletion and amortisation
2. Valuation of inventories
3. Valuation of investment
Selection of Accounting Policies:
Choice of accounting policy is an important policy decision which effects the performance measurement as well as financial position of the business entity.
Three major characteristics which should be considered for the purpose of selection and application of accounting policies which is Prudence,Substance over from,and Materiality.
The basis for selecting accounting policies can be shown in the following chart as:
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