Question

What are the main changes in accounting principles/methods?

Answer 1

The main changes in accounting principles or merhods are related to change in methods previously used or change in reporting in the financial statements.The change in the accounting principles can lead to major changes in the financial statements.For e.g a company was using LIFO method to value the inventories but from the next year onwards it changes its method to FIFO method so this change can lead to major change in the value of inventories

The company was previously using the concept of accrual but from now onwards the company decided to use cash system so whole of the financial statements changes and this lead to major effect in the comapny

Any Change in the accounting principles or methods should be disclosed in the footnotes of the financial statements as they are material to the stakeholders of the organisation

answered by: anonymous