Explain the features of accounting principles.
Explain the features of accounting principles.
Features of accounting principles are as follows
(i) Man-made: Accounting principles are man-made. They are derived from men based on practical experience and reason. However, they lack in universal applicability as they are not laboratory tested like principles of physical and other natural sciences.
(ii) Flexible: Accounting principles are flexible and not rigid. They keep on changing with the passage of time and in response to changes in business practices and government policies. They also change according to the need of users of accounting information.
(iii) Generally Accepted: The general acceptance of the accounting principles or practices depends upon, how will they meet the following three criteria
(a) Relevance: A principle is relevant to the extent, it results in information that is meaningful and useful to the user of the accounting information.
(b) Objectivity: A principle is objective to the extent the accounting information is not influenced by persona; bias or judgment of those who provide it.
It also implies verifiability which means that there is some way of ascertaining the correctness of the information reported.
(c) Feasibility: A principle is feasible to the extent, it can be implemented without much complexity or cost.
Features of accounting principles are as follows
(i) Man-made: Accounting principles are man-made. They are derived from men based on practical experience and reason. However, they lack in universal applicability as they are not laboratory tested like principles of physical and other natural sciences.
(ii) Flexible: Accounting principles are flexible and not rigid. They keep on changing with the passage of time and in response to changes in business practices and government policies. They also change according to the need of users of accounting information.
(iii) Generally Accepted: The general acceptance of the accounting principles or practices depends upon, how will they meet the following three criteria
(a) Relevance: A principle is relevant to the extent, it results in information that is meaningful and useful to the user of the accounting information.
(b) Objectivity: A principle is objective to the extent the accounting information is not influenced by persona; bias or judgment of those who provide it.
It also implies verifiability which means that there is some way of ascertaining the correctness of the information reported.
(c) Feasibility: A principle is feasible to the extent, it can be implemented without much complexity or cost.
