Accounting Principles And Its Impact On Accounting

Change happens in a business environment for a variety of reasons. Those reasons depend on both internal and external factors.

Note: Due to the issuance of certain new accounting literature, changes in the status of ongoing projects during the past year, or evolution of practice, the following updates to the existing cases should be noted.

Items included in other comprehensive income shall be classified based on their nature. For example, under existing accounting standards, other comprehensive income shall be classified separately into foreign currency items, minimum pension liability adjustments, and unrealized gains and losses on certain investments in debt and equity securities. Additional classifications or additional items within current classifications may result from future accounting standards.

Accounting is a product of many estimates and judgments. It is essentially a rear-view mirror, looking back at what has happened. To add to the problem the view changes with each new accounting period.

events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received.

Moreover, ASC 250-10-45-17 presents that “A change in accounting estimate shall be accounted for in the period of change if the change affects that period only or in the period of change and future periods if the change affects both. A change in accounting estimate shall not be accounted for by restating or retrospectively adjusting amounts

The next step is to inspect the accounting estimates made by the company. It is another area in which misstatements can easily be occurred. In this area, we will also identify any potential trends that may be offsetting the financial

The auditor must identify in the auditor’s report those circumstances in which accounting principles have not been consistently observed in the current period in comparison to the preceding period.

New accounting rules will affect the company’s revenue recognition in the upcoming year. Many companies such as Rolls-Royce Holdings will be affected by this change. Rolls-Royce Holdings books its revenues even before its services performed. For instance, they sell large engines and maintenance service, and Rolls-Royce Holdings booked the revenue even 1.5 years in advance. They will no longer able to book this unperformed revenues for the upcoming year. The investors will have a better picture on the firm’s revenues based on the new revenue recognition. Some sectors, such as telecommunications, media and pharmaceuticals, are expected to be affected more than others, because the firms recognize revenues before they perform the services. Moreover,

The changes in the above given accounting policies and estimates, affected the reported profits as follows:

Accounting transactions are professional occasion that has either a positive or negative budgetary impact on the financial statements. One impact of transactions in a financial statement will increase or decrease the accounts contingent on the transaction that has taken place. The history of revenue that has come or gone from the business will be shown on both financial statements and accounting transactions. Many businesses make several transactions daily. Errors can have a negative impact on financial statements, because the facts come from the accounting transactions

If the auditor does not concur with the appropriateness of the accounting principle change, in most countries, a qualified opinion is called for. The above considerations have a general nature, i.e. are applicable to any relevant situation, thus, are relevant to the USSC case.

They also include certain changes in its financial position which could be due to different factors such as financial performance or raising debt.

Finance probably does not need to know about the change. When finance is distinct from accounting, the function generally refers to how the company manages its cash flow and finances its organization (Siew, 2009). It is

Financial Statements basically show the historical performance or record of the company at some previous point of time. By the time when financial statements are made public, changes are many economical areas such as market conditions, currency exchange rate and inflations can change the values of assets and liabilities. In this case there often exist discrepancies between book value of assets and their market values.