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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

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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

ANSWER - TRUE

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.

The amount of debit and credit on item where only assumption and estimates are available.

For example :

  • Useful life of non-current assets
  • Impairment of non-current assets
  • Bad debts
  • Provision for obsolete and slow-moving stock
  • Revalued amounts of non-current assets
  • Provision for pension benefits
  • Depreciation

And this assumption and estimates are useful in establishing a companys risk of accounting distortions.

jeff jeffy answered 2 years ago
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