- This topic has 3 replies, 2 voices, and was last updated 8 months ago by John Moffat.
- You must be logged in to reply to this topic.
Listed below are some comments on accounting concepts.
1) Financial statements always treat the business as a separate entity.
2) Materiality means that only items having a physical existence may be recognised as assets.
3) Provisions are estimates and therefore can be altered to make the financial results of a business
more attractive to investors.
Which, if any, of these comments is correct, according to the IASB’s Conceptual Framework for
A 1 only
B 2 only
C 3 only
D None of them
How is first statement correct if Financial Statements are made by Sole-trader or partnership? There statements also considered to deal business as separate entity?
It makes no difference whether the business is a company or a sole trader or a partnership. The financial statements are for the business and treat the business as separate from the owner(s).
I state this in the very first chapter of our free lecture notes and in the lectures working through this chapter.
This is due to Accounting entity concept?
It is the separate entity concept.