Question

It is said that the accounts are not accurate on a balance sheet; why is this so?

Answer 1

Every accountant wants the balance sheet and the income and expenditure statement prepared for the organization to be as accurate as possible, but it is not possible to have a perfect balance sheet and income statement since there are many estimates being made while preparing financials which are generally based on various assumptions. It is not true that all these assumptions will go correct. There might be various deviations from the estimates made and the balance sheet may not represent the accurate values. Preparing an accurate balance sheet us vital for the management of the organization in decision making. The estimates made should be based on generally accepted accounting principles and a historic approach by complying with the relavant accounting standards.