Changes In Accounting Policies

In the earlier articles, we have discussed Changes in accounting estimates and fundamental errors.

This article explained what is this Changes In accounting Policies

Changes In Accounting Policies

  • As we know Accounting policies are the specific principles, bases, methods, conventions, rule and practices that an enterprise adopts in the preparation and presentation of its financial statements.

  • Based on consistency concept, accounting policies, enterprises do not change their accounting policies from period to period otherwise the comparability objective of financial reporting is not achieved.

  • Based on a few exceptions, accounting policies which are not appropriate need to be changed otherwise this will result in fundamental errors.

Two circumstances warrant a change in accounting policy:

  • Made only if required by new law/statute or new accounting standard and

  • If the change will result in a more appropriate presentation of events or transactions in the financial statements of the enterprise.

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