Explain of principles of interpretation of accounting ratio
Answers
Answer:
Accounting principles are the rules and guidelines that companies must follow when reporting financial data. The Financial Accounting Standards Board (FASB) issues a standardized set of accounting principles in the U.S. referred to as generally accepted accounting principles (GAAP).
The best-known of these principles are as follows:
•Accrual principle. ...
•Conservatism principle. ...
•Consistency principle. ...
•Cost principle. ...
•Economic entity principle. ...
•Full disclosure principle.
Hope it helps you !
Answer:
An accounting ratio compares two line items in a company's financial statements, namely made up of its income statement, balance sheet, and cash flow statement. ... Accounting ratios also work as an important tool in company comparison within an industry, for both the company itself and investors.