6 Limitation of financial accounting.

limitation of financial accounting

Financial accounting is the process of recording, summarizing and reporting the myriad of transactions resulting from business operations over a period of time.

The following are limitation associated with financial accounting: read more

Six (6) advantages that companies can derive from disclosing social and environmental information in annual report.

Benefits that companies derive from disclosure of social and environmental information in annual reports:

  • Top Management/Board of Directors: top Management needs the disclosure to respond to press criticisms, answer shareholders‟ questions and ensure that company policies are followed. 
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    Key points from IAS 8.

    IAS 8

    Accounting policies are the specific principles, bases, conventions, rules, and practices applied by an entity in preparing and presenting financial statements.

    How to select and apply accounting policies?

    • If there is a standard or interpretation which deal with the transaction, then use that standard or interpretation
    • If there is no standard or interpretation which deal with the transaction, the judgment should be applied. The following sources should be referred to, to make the judgment:
    1. Requirement and guidance in other standards/interpretations dealing with similar issues
    2. Definition and recognition criteria in the framework
    3. Use other GAAP that use a similar conceptual framework and/or may consult other industry practice/accounting literature that is not in conflict with standards or interpretations

    Accounting policies should be applied consistently for similar transactions, events or conditions. read more

    What is contract manufacturing?

    Just in time inventory management system - meaning.

    Contract manufacturing is the use of external suppliers for the finished products,components or service instead of producing or providing them in house. read more