Question

Which of these ten accounting assumptions, principles, or constraints has the greatest effect on a company's...

Which of these ten accounting assumptions, principles, or constraints has the greatest effect on a company's financial statements:

Conservatism

Economic Entity

Expense recognition

Revenue recognition

Periodicity

Monetary unit

Materiality

Measurement

Going concern

Full disclosure

Please explain why.

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Answer #1

Revenue Recognition is the most important accounting principle to a company because the time of recognition of revenue plays a important role in deciding the profit of the company which the shareholders wants. The Total Company maintainance will be depending on the revenue it generates, therefore Revenue recognition is most important.

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