Question

Write and explain the accounting policies used by Ghana Ministry of Finance in its financial statements preparation

Answer 1

Introduction to Accounting Policies.

Accounting policies is basically a set of rules that dictate a company's financial accounting. Accounting policies are a set of rules or a procedures that have been followed by which company prepares a financial statement. ​​​​​​

Need of Accounting Policies.

Accounting policy is needed when a company prepare the complex statement or calculated advanced method of accounting it need some guidelines to follow with.

For example: Accounting policies to choose depreciation method a company needs to follow a specific accounting.

Accounting policy may vary company to company but whatever a company does in regards to the accounting policy it should be in accordance with GAAP (Generally Accepted Accounting Principles).

Importance of Accounting Policies

​​​​​​1. Proper framework

To articulate the affairs of the company it needs to prepare the financial statement and if the financial statement are just prepared without any guidelines there would be no coherence with the same. Financial statement accounting policies also offers a solid framework to follow, so that the company may comply to the right structure and prepare its financial statements.

2. Disclosure

​​​​​ A company discloses what accounting policies following they have been following. A proper disclosure of the accounting policies is very important.

3. GAAP or IFRS