Accounting Policies Video Lecture | Principles and Practice of Accounting - CA Foundation

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FAQs on Accounting Policies Video Lecture - Principles and Practice of Accounting - CA Foundation

1. What are accounting policies?
Ans. Accounting policies refer to the specific principles, rules, and procedures that an organization follows to record, measure, and report financial transactions and events. These policies provide guidelines for the preparation and presentation of financial statements.
2. Why are accounting policies important?
Ans. Accounting policies are essential as they ensure consistency and comparability in financial reporting. They help stakeholders, such as investors, creditors, and regulators, to understand and analyze an organization's financial performance and position accurately. Consistent accounting policies also enable meaningful comparisons of financial statements over time and across different entities.
3. How are accounting policies determined?
Ans. Accounting policies are determined by management based on various factors, including applicable accounting standards, regulatory requirements, industry practices, and the specific circumstances of the organization. The policies should be selected and applied in a manner that best reflects the economic substance of transactions and events.
4. Can accounting policies change over time?
Ans. Yes, accounting policies can change over time. Changes in accounting policies may occur due to new accounting standards, changes in regulatory requirements, improvements in financial reporting practices, or evolving business circumstances. When changes are made, organizations are required to disclose the nature and impact of the change in their financial statements.
5. Are accounting policies the same as accounting principles?
Ans. No, accounting policies and accounting principles are not the same. Accounting principles are broad concepts and guidelines that guide the overall preparation and presentation of financial statements, such as the accrual basis of accounting or the historical cost principle. On the other hand, accounting policies are specific rules and procedures that an organization adopts to implement those accounting principles in its financial reporting.
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