54 695
Assignments Done
98,2%
Successfully Done
In November 2017
Your physics homework can be a real challenge, and the due date can be really close — feel free to use our assistance and get the desired result.
Be sure that math assignments completed by our experts will be error-free and done according to your instructions specified in the submitted order form.
Our experts will gladly share their knowledge and help you with programming homework. Keep up with the world’s newest programming trends.

Answer on Finance Question for sugunah

Question #41442
how the basic accounting principle of „prudenceā€Ÿ affects the preparation of financial statements (4 marks)
Expert's answer
The aim of the prudence concept is to reflect the least favourable position of a business. To those unfamiliar with the concept, it might seem strange to want to do this. After all, a healthy position can work in a business’ favour sometimes. This principle is important in facilitating faithful representation – ensuring that financial statements do not mislead or give false optimism to their various users. As such, the prudence concept is a fundamental accounting principle, with the first International Accounting Standard (IAS I) outlining its role.

The prudence concept can conflict with other fundamental concepts – like the accruals basis of accounting. Accruals recognize transactions that have not yet been completed – like a hire purchase sale or prepaid expenses. In such cases, one principle (in this case, accruals) should prevail.

Prudence, along with other fundamental principles, creates a sound platform for accounting. However, note that it is no excuse for an organisation to withhold revenue or create hidden reserves. After all, that conflicts with the principle of Fair Presentation.

Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!

Comments

No comments. Be first!

Leave a comment

Ask Your question