The accounting profession has the important responsibility of measuring company
ID: 2818058 • Letter: T
Question
The accounting profession has the important responsibility of measuring company performance accurately and fairly on a timely basis" (Kieso et al., 2013, p.5, emphasis in original). Yet we know that the preparation of financial statements involves the use of accrual accounting and estimates in conjunction with the foundational principle of periodicity. Comment on the statement from Kieso et al. in the context of: your understanding of accurately and fairly; the concepts of entity and proprietary perspective; the conceptual framework, the asymmetry of accounting information and the requirements of multiple stakeholders.Explanation / Answer
the financial performance has to be measured on a timely and accurate manner so that financial decisions are made on the basis of this information. Timely information is useful for planning strategies, determing success, estimating failures.
timely financial information is important so that the decision making can be done on a timely basis. and accurate financial information is important to mitigate errors.Very easily accounting fraud can be detected if there is discrepancy in the numbers. accurate financial information buils trust and enhances the reputation of the company.
information asymmetry happens when the accounting agents have more information than others. The stakeholders rely on such information.
information asymmetry happenes when the managers have more information than the stakeholders and they hide or conceal information to ensure that the company is performing well.
requirements of multiple stakeholders :multiple stakeholders require such financial information as they have invested their money and they need information about the financial performance of the company.
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