ACC1000 Study Guide - Final Guide: Market Discipline, Market Timing, Information Asymmetry
Document Summary
What assets and liabilities are affected: recognition when should they be recognised and when should they be entered into the financial reports, measurement which method of measurement, disclosure any other information investors need to know. Answers to these questions are found in an entity(cid:495)s accounting policies. Aasb (cid:861)(cid:860)8 paragraph 5 (cid:498)specific principle bases, conventions, rules and practices applied by an entity in preparing financial reports(cid:499) Accounting policies are developed and applied by accountants and evaluated by auditors, courts, users, regulators etc. Aasb 108 gives us guidance about choice of accounting policy, prescribes criteria for selecting and changing policy, where aasb standard applies, use it, where no standard applies, use judgement (para 10-12) Accounting policy choice matters because accounting signals results in investing and decision making. The choice of accounting policy may be misleading to investors so need to be careful. Could face punishment if you use the wrong choice.
