![]() ![]() What is Historical Cost?Ĭompanies must measure various items in the balance sheet and other financial statements. One of those consists of the historical cost basis. The framework provides several bases to measure those items. One such area includes the measurement bases for various items in the financial statements. Nonetheless, the framework covers a broader range. However, if a standard goes against it, the accounting standard will prevail. The conceptual framework also covers areas that may apply to every accounting standard. ![]() In those cases, the latter takes precedence. In some cases, the contextual framework may conflict with accounting standards. While accounting standards apply to specific areas, this framework covers a broader area. Similarly, it dictates the general purpose of financial reporting. It sets out the information needed to assess various aspects. The contextual framework for financial reporting also dictates some aspects of the process. However, they must follow a standard body. ![]() There are several tools that companies may use when reporting financial information. Based on it, stakeholders can make various decisions regarding their relationship with the company. This information allows them to interpret a company’s activities and operations. The primary objective of reporting financial information to stakeholders is to provide useful data for decision-making.
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