In This Chapter
Having a choice of accounting methods
Understanding the alternatives for calculating cost of goods sold expense and stock cost
Dealing with depreciation
Writing down stock and debtors
Keeping two sets of books
Some people put a great deal of faith in numbers: 2 + 2 = 4, and that’s the end of the story. They see a number reported to the last digit on an accounting report, and they get the impression of exactitude. But accounting isn’t just a matter of adding up numbers. It’s not an exact science.
Accountants do have plenty of rules that they must follow. The official rule book of generally accepted accounting principles laid down by the Accounting Standards Board (and its predecessors) is more than 1,200 pages long and growing fast. In addition there are the rules and regulations issued by the various government regulatory agencies that govern financial reporting and accounting methods, and those issued by publicly owned companies ...