Financial Accounting coursework Essay Example | Topics and Well Written Essays - 1250 words

Financial Accounting coursework - Essay ExampleThus the accrual mode of accounting measures the position and performance of the company base on the transactions made in the course of business irrespective of the cash receipts and payments done for the business transaction. The accrual method of accounting combines the current and evaluate cash inflows and outflows to determine the consolidated pecuniary position of the company (Sofat and Hiro, 2008, p.36). Marks and Spencer has use the accrual method to determine the expected value of the cash flows based on the historical sales returns so that the accrued figures could be allocated accurately in the pecuniary statements. Assumptions related to Going-Concern for preparing financial statements The assumptions related to going concern for preparing financial statements ar that the company would continue its business in near future unless the management decides to liquidate the company or decides to stop operations. When the finan cial statements are vigilant by assuming the going concern of a business entity, the assets and liabilities are allocated with the assumption that if the company continues its operations, it would be able to acquire the same amount of assets or would be able to service the same amount of liabilities (Bhattacharyya, 2011, p.48). Ex. Marks and Spencer have prepared their financial statements with the assumption of going concern after considering the risk and uncertainties of the business. The opinion of the assets and liabilities for the foreseeable future has been done based on projections after consideration of risk. Key accounting concepts used in conceptualisation of financial statements The accounting method is a tool based on which the financial statements are prepared and the information given in the financial statements are meant for the users. Thus the preparation of financial statements involves key accounting concepts which are standardized for the companies. The key acc ounting concepts are combined together to form the generally accepted accounting principles (GAAP). The accounting concepts that are used in the preparation of the financial statements are such as money measurement, entity, cost, going concern, objectivity, dual aspect, time period, realization, conservatism, consistency, matching, materiality. The consideration of an entity and its distinction from the owners is important for preparation of the financial statements. The business, sales and receipts in accounting are done in terms of money measurement. The business is considered to carry on its economic activities for a sustainable period of time unless the operations cease to exist on the basis of decision of owners. This concept forms the basis of a going concern that is used in accounting method (Crosson andNeedles, 2010, p.52). The accounting measurements takes into consideration the cost incurred by the company for running the business. This includes the cost of capital, cost o f goods sold, etc. The dual aspect in accounting states that the assets are equal to the liabilities of the company. The objectivity in accounting met