Question

Choose at least two concepts in financial reporting you have learned and explain how you may use them in your present or future accounting position. Make sure you provide details to include how each concept will help you support the financial goals of the company you currently work for or will work for in the future. 

Answer 1

Concepts in Financial reporting:

1. Accruals concept: Accural concept means all the expenses and revenue will be recorded in the books of account when they will occur not when actually cash is paid or received.

2. Going concern concept: This concept means that the entity is a going concern and it will remain in business in operation in future periods. As per this concept, the expenses and revenue may be deferred to a future period, when the company is still in operation.

Both these concepts are very important. If a company is selling its products/services on account, the accural concept will be used to record the transaction. May cash will be received in next financial year, it will be reported in the current financial years report and give the investors and all other reader the correct financial position of the company.

Going Concern, by making this assumption the accountant is justified in deferring some of the certain expenses to the future period, when the company is still in operation.