Because of assumptions and estimates that go into the preparation of financial statements, the

Because of assumptions and estimates that go into the preparation of financial statements, the statements are inaccurate and are, therefore, not a very meaningful tool to determine the profits or losses of an entity or the financial position of an entity. Comment.

Expert Solution

With the time period assumption, inaccuracies of accounting for the entity, short of its complete life span, are accepted. The assumption is made that the entity can be accounted for reasonably accurately for a particular period of time. In other words, the decision is made to accept some inaccuracy because of incomplete information about the future in exchange for more timely reporting. The statements are considered to be meaningful because material inaccuracies are not acceptable.

Accounting assumes accuracy within time frames, tolerating incomplete data for timely reports, ensuring meaningful statements.

Junaid answered 9 months ago

Notes to Financial Statements include a section on Major Assumptions and Estimates, and this section can...

Notes to Financial Statements include a section on Major Assumptions and Estimates, and this section can be useful in establishing a company's risk of accounting distortions. TRUE or FALSE

Financial Statements Preparation

Prepare the required financial statements from the given information.

Preparation of Financial statements under the guidance in IAS 1 Preparation of Financial Statements should be...

Preparation of Financial statements under the guidance in IAS 1 Preparation of Financial Statements should be sufficient for most entities. However, there are business companies that are required to prepare reports in a particular format for operating segments, and others that are required to prepare for presentation interim financial statements. The IASB issued IFRS 8 Operating Segments and IAS 34 Interim Financial Statements to provide guidance in relevant financial reporting. Required: ( a ) Justify the relevance of issuing each...

In the preparation of fund financial statements, why the notes to financial statements are interesting?

In financial accounting and rules of financial reporting: 1. What are estimates and assumptions? 2. Why...

In financial accounting and rules of financial reporting: 1. What are estimates and assumptions? 2. Why is reporting them required? 3. What does this information tell you about a company?

Preparation of financial statements for not-for-profit Following is financial data for the Center for Cardio Research,...

Preparation of financial statements for not-for-profit Following is financial data for the Center for Cardio Research, a not-for profit organization investigating the benefits of exercise for heart disease. Given this information, prepare the Statement of Activities and the Statement of Financial Position. Unrestricted Temporarily Restricted Permanently Restricted Revenues—contributions $4,238,993 $427,332 $80,553 Revenues—investment 183,224 83,772 103,758 Net Assets, beginning of year 3,732,853 2,851,667 783,228 Long-term liabilities $1,383,859 Contributions receivable 1,238,657 Expenses—support 882,937 Net assets released from restriction 337,833 Cash 438,654 Payables...

What is the role of the external auditor in the preparation and integrity of financial statements?...

What is the role of the external auditor in the preparation and integrity of financial statements? Whose role is more important—management or the external auditor?

The following information is available for the preparation of the government-wide financial statements for the City...

The following information is available for the preparation of the government-wide financial statements for the City of Southern Springs as of April 30, 2020: Cash and cash equivalents, governmental activities $ 580,000 Cash and cash equivalents, business-type activities 1,220,000 Receivables, governmental activities 690,000 Receivables, business-type activities 2,033,000 Inventories, business-type activities 800,000 Capital assets, net, governmental activities 20,763,000 Capital assets, net, business-type activities 10,920,000 Accounts payable, governmental activities 993,000 Accounts payable, business-type activities 859,000 General obligation bonds, governmental activities 11,983,000 Revenue...

The Conceptual Framework for the Preparation of Financial Statements describes the basic concepts that underlie the...

The Conceptual Framework for the Preparation of Financial Statements describes the basic concepts that underlie the preparation of financial statements for presentation to external users who include shareholders. The contents of The Conceptual Framework serve as a guide to development of International Financial Reporting Standards (IFRSs). It seeks to share understanding of certain key terms that are used in IFRSs and may be referred to by directors when handling a business matter that is not directly addressed by any issued...

Preparation of financial statements for a nonprofit Following are the preclosing fund trial balances as of...

Preparation of financial statements for a nonprofit Following are the preclosing fund trial balances as of December 31, 2018, for Oliver’s Place, a nonprofit. Prepare a statement of activities for the year ended December 31, 2018; also prepare a statement of financial position as of December 31, 2018. Oliver’s Place Preclosing Trial Balances December 31, 2018 Unrestricted Current Fund Debit Credit Cash $11,000 Contributions receivable 20,000 Investments 22,000 Allowance for uncollectible contributions $5,000 Contributions revenue—Support without donor restrictions 115,000 Contributed...

Question