Accounting Coursework

Accounting Coursework

The paper focuses on the following statement and discusses it in detail. “Although the basic accounting concepts define the assumptions underlying the preparation of financial statements and the process of preparation in the UK is well regulated, this does not entirely eliminate the need for judgments/estimations to be made by preparers of accounts and in many areas still leaves significant choice in accounting treatments”.

The objectives of financial statements determine the nature of the information required to meet requirements of privileged users. The fact that users and preparers Financial to agree on these goals is a prerequisite for the development of standards appropriate accounting and financial reporting and the exercise professional judgments required by the implementation of accounting principles and rules. Without agreement, there would be no criterion to justify the validity of the choice of a standard or judgment over another and to judge the relative effectiveness of solutions competition on the purpose of financial statements (Patel, 2006).

For the financial statements give a true representation of the situation of the company and its results, accounting work and raise their professional judgments are conducted compliance with generally accepted accounting principles or GAAP (generally accepted accounting principles), in English: GAAP (Generally Accepted Accounting Principles) in the extent, of course, where GAAP are defined in accordance with the fundamental concepts. Accounting principles generally accepted means all methods, rules and procedures that determine accepted practice at some point in time. Their knowledge by users facilitates understand ability of accounting information. The direction an entity is required to have a good knowledge of sources of GAAP Similarly, it is obliged to take cognizance of changes in the sources, because what constitutes GAAP for some point will evolve and adapt to reflect the level of progress accounting research and new economic or social conditions. Their mastery of PCGA by the accountant or auditor is a prerequisite for the quality of financial statements that prepares or it controls. Inside the PCGA, the exercise of professional judgment plays a role. Indeed, the use of judgment is required to apply general standards to a situation such as choice of the method most appropriate to the circumstances of several acceptable methods. The exercise of professional judgment is even more necessary in the absence a standard on the problem studied.

The preparation of financial statements in conformity with GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods (Whittington, 2008).

The ??Preparation of annual accounts in conformance with generally accepted accounting principles makes it necessary to a certain extent for management to make estimates and assumptions that affect the value of the assets and liabilities reported, the disclosure of contingent liabilities as at the accounting date, as well as the income and expenses during the periods under report.

Responsibility for the compilation, contents and presentation of prospective financial information ...