Question

How do the three basic accounting criteria help "accounting make sense?"

3 Basic Accounting Criteria:

1. Accounting information should be relevant. Accounting reports should provide information that describes as accurately and completely as possible the status of assets, liabilities, and owners' equity, the results of operations, and cash flows.

2. Accounting information should be objective. The amounts reported should not be biased, particularly by the subjective judgments of management. (The FASB uses the term reliable in the same way we use objective.)

3. The reporting of accounting information should be feasible. Its value should exceed the cost of collecting and reporting it.

Answer 1

Yes, all the above given criteria make sense of accounting.

1st basic criteria

1. All the accounting information should be relevant because all the decisions taken by the management will be mostly depend on the results given by the accounting department

2. All accounting details shows the net worth of organization and based on net worth many of the contracts can be approaches to company

2nd basic criteria

1. All the workings and every part of work in accounting should be consists of a objective it may be same or vary with one work ti other

2. Major objective of the accounting is proper calculation and proper interpretation of organization in financial terms

3rd basic criteria

1. All the accounting information should be feasible.

2. Accounting involves giving the projections about the future also then all the projections should feasible and realistic and those should be achievable

3. No accounting information should not consists of the imaginary values which cannot be achievable

These are the effects of basic criteria of the accounting

I hope, all the given information by me is helpful to you.

Thank you.