accounting policies

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2020 Updated list of International Accounting Standards (IAS)

The following are the list of updated international accounting standards (IAS) in 2020:

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The required accounting treatment for the Correction of an Error.

IAS 8: Accounting Polices, Changes in Accounting Estimates and Errors lays down criteria for the selection of accounting policies and prescribes circumstances in which an entity may change an accounting policy. The standard also deals with accounting treatment of changes in accounting policies, changes in accounting estimates and correction of errors.

The following are steps required to correct previous years

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The required treatment for the change in Accounting Policy.

The entity shall apply the change retrospectively. This means that the accounts must be altered so that they contain the numbers which would have been there had the new policy always been in force. However, this will not apply if it is impracticable to determine either the period specific effects or the cumulative effect of the change. The initial application … Read the rest

Difficulties faced by entity when applying a change in accounting policies.

Accounting policies are the specific principles, bases, conventions, rules, and practices applied by an entity in preparing and presenting financial statements.
Changes in accounting policies is dealt with in IAS 8

Difficulties faced by entity when applying a change in accounting policies are:

  • When it is impracticable to determine either the period-specific effects or the cumulative effect of the
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6 limitations of using accounting ratios in appraising financial performance.

Accounting ratio are used to measure the efficiency and profitability of the company based on its financial reports. They provide a way of expressing relationship between one accounting data point to another, and are the basis of ratio analysis.



The following are limitation of accounting ratios in appraising financial performance:

  • Inconsistent definition of ratios
  • Financial
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