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Accounting Theory: Firms Disclosure of Information - Essay Example
Finance & Accounting
Pages 5 (1255 words)
For sustaining in a market a firm need invest from the investors which they can get by winning the confidence of the investors. The investor confidence can be won by disclosing the information about the company in public…
The investor confidence can be won by disclosing the information about the company in public. The information should be accurate and properly audited by the auditors. There are various accounting theories which are stated by the researchers. This paper is an attempt to analyze the reason of disclosing various type of information by the firm using the variety of accounting theories. Accounting Theories and Assumptions There are certain accounting assumptions which are the basic postulates of accounting means they are the base of accounting. The accountants face some difficulties when they are recording the business transactions. So the basic assumptions are made which are based on the experience. These accounting assumptions are the basis of the accounting theories. These are as follows. Business Entity Concept: This is the most basic concept of accounting. According to the concept the organization and the owners are two separate entities. If the business transaction also records the transactions of the individuals then the financial statements would not be accurate as the same transaction is recorded for the business and the owner’s personal account. The business entity concept is necessary to implied by the accountants to measure that what information is relevant to the business and which are not. ...
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