Accounting And Financial Reporting
Understanding accounting principles and theory is essential for interpreting corporate financial statements.
Double-Entry System:
Originated in the late 13th century, with the first complete record in Genoa in 1340.
Accounting as an Information System:
Involves measuring, classifying, summarizing, analyzing, and interpreting business transactions over a defined period, then communicating this information to users for decision-making.
Accounting Theory:
According to Kenneth S Most, a theory organizes ideas, explains phenomena, and predicts behavior. The goal is to provide principles for evaluating and developing accounting practices.
Stakeholders:
Accounting serves multiple stakeholders: Proprietors, Entities, Investors, and Government/regulatory agencies. It must benefit all stakeholders equally.
Modern Accounting Standards:
The structured presentation of accounts, governed by accounting standards and IFRS, ensures transparency and prevents fraud.
Importance of Standards:
Following accounting standards helps companies present clear, understandable accounts, aiding financial management and regulatory compliance.