Answer to Question #216399 in Accounting for Naafu Peter

Question

1). Examine the role of accounting concepts in the preparation of financial statements. Do you find any of the accounting concepts conflicting
with each other? Give examples.

2). Discuss briefly the basic concepts and conventions of accounting?

3). Why should accounting practices be standardised? Explain.

Answer 1

Financial reporting's goal is to give information that is both relevant and valuable. Accounting ideas are concerned with the rules and regulations that must be followed in order to meet the needs of investors, employees, and other stakeholders.

If the application of one accounting concept or principle conflicts with the application of another accounting concept or principle, accountants must assess what is best for the financial information's users.

2)These basic accounting concepts are as follows:

Accruals concept. Revenue is recognized when earned, and expenses are recognized when assets are consumed.

Conservatism concept.

Consistency concept.

Economic entity concept.

Going concern concept.

3)Because all entities follow the same rules, accounting standards make the financial statements credible and allow for more economic decisions based on accurate and consistent information.