Question

11. In which of the following cases, accounting estimates are needed?

Answer 1

Answer:

For these items, estimation is necessary. Accounting estimates are those which approximate a monetary amount in absence of precise values. Estimates are inherent in many accounting topics such as fair value, impairment, collectability, obsolescence, realizable value, and accrued expenses.

Answer 2

Accounting estimates are needed in accrual basis of accounting.

• They are needed to make the financial statement more accurate .
• They usually anticipate any the events that have not yet occured.
• They also estimate the event which are probably going to occur.
• A change in accounting estimate is needed when their is an effect of the carrying amount of already existing assets and liabilities.