Question

Explain the principles of:

 Accounting

 Financial statements

 Cash flow
Answer in 250-300 words for each item.

Answer 1

Explanation accounting for principles of Principles of Accounting was often the title of the introductory course in accounting. It was also common for the textbook used in the course to be entitled Principles of Accounting. Principles of accounting can also refer to the basic or fundamental accounting principles: cost principles, matching principles, full disclosure principles, materiality principles, going concern principles, economic entity principles, and so on. In this context, principles of accounting refers to the broad underlying concepts which guide accountants when preparing financial statements. Principles of accounting can also mean generally accepted account ing principles (GAAP). When used in this context, principles of account ing will include both the underlying basic accounting principles and the official accounting pronouncements issued by the Financial Accounting Standards Board (FASB) and its pre decessor organizations. The official pronouncements are detailed rules or standards for specific topics.

Explanation to Financial Statements A summary of an entity's results of operation for a specified period of time is revealed in the income statement, as it provides informa tion about revenues generated and expenses incurred. The difference between the revenues and expenses is identified as the net income or net loss. The income statement can be prepared using a single-step or a multiple-step approach, and might be further modified to include a number of special disclosures relating to unique items These topics will be amplified in several subsequent chapters. For now, take careful note that the following income statement illustration relates to activities of a specified time period (e.g., year, quarter, month), as is clearly noted in its title:

Explanation to Cash Flows The incremental cash flow principle suggests that only cash flows relevant to the valuation of a project are the incremental cash flows resulting from it. The discounted cash flow (DCF) model is based on the assumption that a stock's value is basically equal to the present value of its estimated future cash flows.
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