theory base of accounting introduction
Answers
Explanation:
➡The theory base of accounting consists of principles, concepts, rules and guidelines developed over a period of time to bring uniformity and consistency to the process of accounting and enhance its utility to different users of accounting information.
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Explanation:
For making the accounting infor mation
meaningful to its internal and external users, it is
important that such information is reliable as well
as comparable. The comparability of information is
required both to make inter -firm comparisons, i.e.
to see how a firm has performed as compared to
the other firms, as well as to make inter-period
comparison, i.e. how it has performed as compared
to the previous years. This becomes possible only if
the information provided by the financial statements
is based on consistent accounting policies, principles
and practices. Such consistency is required
throughout the process of identifying the events and
transactions to be accounted for, measuring them,
communicating them in the book of accounts,
summarising the results thereof and reporting them to the interested parties.
This calls for developing a proper theory base of accounting.
The importance of accounting theory need not be over-emphasised as no
discipline can develop without a sound theoretical base. The theory base of
accounting consists of principles, concepts, rules and guidelines developed
over a period of time to bring uniformity and consistency to the process of
accounting and enhance its utility to different users of accounting information.
Apart from these, the Institute of Chartered Accountants of India, (ICAI), which
is the regulatory body for standardisation of accounting policies in the country
has issued Accounting Standards which are expected to be uniformly adhered
to, in order to bring consistency in the accounting practices.