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What is the distinction between accounting policies and accounting basis?
Christianfrempong
A layman's answer. Policies provides guidance on how something is handled, judged, rated, ranked, executed, etc. Policy provides all concerned with direction on how to proceed. Example: my policy is to answer all questions in a layman's term.
Basis amounts to "what is", or "to be", developed in order to comply with policy. For instance; the basis for our nation's policy on ransom is that to allow payment for acts involving hijacking/terrorism has been shown to encourage further activity of this nature. Our policy is to not pay ransom since it might contribute to further hijacking/terrorism acts.
In accounting, such an example would be written as such: accounting policy allows for us of a two-year verses five-year depreciation schedule on the purchase of capital equipment. The accounting basis for this policy is that it would 1) decrease tax burden in the short term 2) retaining more company funds for use in capital improvements while 3) encouraging expenditure to expand the economy 4) providing job growth to 5) stimulate the economy.
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What is the importance of accounting theory?
Accounting theory is very important in helping people to understand the basis and policies in accounting. From understanding the rules of GAAP to exploring the origins of accounting, being a good accountant involves understanding the theories that support the practice.
How legislation and accounting concepts affect an organization accounting policies?
Describe how the legislation and accounting concepts affect an organisation's accounting policiesReporting methods, measurement systems, and disclosures used by a specific company. The accountant should evaluate the appropriateness of accounting policies employed by management. A description of the company's accounting policies should be presented in a separate section preceding the footnotes to the financial statements or as the first footnote. Disclosure of accounting policies should include Accounting Principles and methods of application that involve: (1) a selection from generally accepted alternatives; (2) those peculiar to the industry or field of endeavor; and (3) unusual or different applications of Generally Accepted Accounting Principles (GAAP). Examples of disclosures are basis of Consolidation, depreciation methods, and inventory pricing. Disclosure of accounting policies assists financial readers in better interpreting a company's financial statements. Thus it results in fair presentation of the financial statements.
Is a change from the cash basis to the accrual basis a change in accounting principle?
Yes it is a change in accounting principle. And a rather drastic change. Accrual Basis of accounting is the most fundamental accounting assumption which is regarded throughout the world. Thus if a person either departs or adopts the accrual basis its a change in accounting principle.
Accrual basis accounting vs Cash basis Accounting?
Under accrual basis of accounting, transactions are recorded when they actually occurred while in cash basis accounting transactions are recorded when actual cash is paid. Accrual accounting follows the matching concept according to which all revenues in one period should be match with expenses.
What are accounting conversion and concept?
accounting concept are the basic knowledge of accounting on which basis monetry transation are made in accounting book.
The distinction between the crust and mantle is primarily on the basis of a difference in?
Chemistry
What is the importance of accounting theory?
Accounting theory is very important in helping people to understand the basis and policies in accounting. From understanding the rules of GAAP to exploring the origins of accounting, being a good accountant involves understanding the theories that support the practice.
disadvantage of earnings per share?
each company has different accounting policies; this makes it harder to compare individual companies on a like for like basis.
What is the tax basis of accounting?
Whatever basis of accounting is used on an entity's tax return. Typically, used by smaller entities to reduce the burden of financial reporting. Tax basis of accounting is a non-GAAP OCBOA(other comprehensive basis of accounting).
How legislation and accounting concepts affect an organization accounting policies?
Describe how the legislation and accounting concepts affect an organisation's accounting policiesReporting methods, measurement systems, and disclosures used by a specific company. The accountant should evaluate the appropriateness of accounting policies employed by management. A description of the company's accounting policies should be presented in a separate section preceding the footnotes to the financial statements or as the first footnote. Disclosure of accounting policies should include Accounting Principles and methods of application that involve: (1) a selection from generally accepted alternatives; (2) those peculiar to the industry or field of endeavor; and (3) unusual or different applications of Generally Accepted Accounting Principles (GAAP). Examples of disclosures are basis of Consolidation, depreciation methods, and inventory pricing. Disclosure of accounting policies assists financial readers in better interpreting a company's financial statements. Thus it results in fair presentation of the financial statements.
How the legislation and accounting concepts affect an organization's accounting policies?
Reporting methods, measurement systems, and disclosures used by a specific company. The accountant should evaluate the appropriateness of accounting policies employed by management. A description of the company's accounting policies should be presented in a separate section preceding the footnotes to the financial statements or as the first footnote. Disclosure of accounting policies should include Accounting Principles and methods of application that involve: (1) a selection from generally accepted alternatives; (2) those peculiar to the industry or field of endeavor; and (3) unusual or different applications of Generally Accepted Accounting Principles (GAAP). Examples of disclosures are basis of Consolidation, depreciation methods, and inventory pricing. Disclosure of accounting policies assists financial readers in better interpreting a company's financial statements. Thus it results in fair presentation of the financial statements.
Is a change from the cash basis to the accrual basis a change in accounting principle?
Yes it is a change in accounting principle. And a rather drastic change. Accrual Basis of accounting is the most fundamental accounting assumption which is regarded throughout the world. Thus if a person either departs or adopts the accrual basis its a change in accounting principle.
Accrual basis accounting vs Cash basis Accounting?
Under accrual basis of accounting, transactions are recorded when they actually occurred while in cash basis accounting transactions are recorded when actual cash is paid. Accrual accounting follows the matching concept according to which all revenues in one period should be match with expenses.
What is the difference between cash-basis accounting and accrual-basis accounting?
Under cash basis accounting all transactions are recorded when cash is actually received or disbursed.Under accrual basis accounting, all revenues earned during a period are recorded in the period in which they are earned, together with all incurred expensesrelated to those revenues, without regard to whether or when any cash has been received or disbursed.
What are accounting conversion and concept?
accounting concept are the basic knowledge of accounting on which basis monetry transation are made in accounting book.
Is the matching concept related to the cash basis of accounting or the accrual basis of accounting?
Matching concept is the basis of accrual accounting system under which all expenses to earn revenue should be match within same fiscal year so it is part of accrual accounting system
What is types of accounting?
In Accounting, there are two types. There is Cash Basis Accounting and Accrual Basis Accounting. With Cash Basis, transactions are considered to have happened when cash is exchanged, ie. a cash sale or cash payment. In the Accrual Basis, transactions are considered when the event happens. For example, a sale happens when an invoice is given. A debt happens when a bill is received.
