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What are the two underlying assumptions of financial statements?
What are the two underlying assumptions of financial statements?
Stefano
Mon Jan 13 2025
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7
answers
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I am trying to understand the basic assumptions that form the foundation of financial statements. Specifically, I want to know the two fundamental assumptions that financial statements are built upon.
7 answers
HanbokElegance
Wed Jan 15 2025
Financial statement preparation is based on four essential accounting assumptions.
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Skywalker
Wed Jan 15 2025
The first assumption is the economic entity concept, which treats each business entity as a separate and distinct unit from its owners and other businesses.
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Carlo
Wed Jan 15 2025
The second assumption is the going concern principle, which presumes that a business will continue to operate indefinitely in the future.
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henry_harrison_philosopher
Wed Jan 15 2025
This assumption is crucial as it affects how assets and liabilities are valued and reported in the financial statements.
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KatanaSwordsmanshipSkill
Tue Jan 14 2025
The third assumption is the monetary unit assumption, which states that financial statements should be expressed in terms of a stable monetary unit, typically the local currency.
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