Economic And Financial Decisions Are Made Based On Financial Statements

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Economic and financial decisions are made based on Financial Statements. Financial statement is a statement where it records all the financial activities and position status of a company, person or an entity. In order to ensure that statements are useful, it follows certain framework which are based on accounting principles. Accrual accounting and Going Concern Concept accounting are the two accounting principles amongst various concepts. There are other various accounting concepts such as Consistency Concept, Realisation Concept, Prudence Concept, Business Entity Concept, Materiality Concept, Periodicity Assumption, Historical Cost Principle, Revenue Recognition Principle, Objectivity Concept, Conservatism Concept, Full Disclosure Concept, Cost Benefit Concept. Without these concepts, the rule of accounting will not be visible in making financial statements. It is necessary to have these sorts of concepts so that there can be a proper function in the financial department of any Business. But this document will attempt to explain it’s importance and the pros and cons of only Going Concern and Accrual Basis concepts. The Going Concern concept is an assumption of any Business functions without the possibility of bankruptcy in the forthcoming, future is being predicted no less than the next twelve months. This means the entity does not have any intention or any need to liquidate or restrain significantly the scale of its different operations, and it only exists long

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