3

Important Accounting Concepts

The Rules That Shape Financial Statements

Key Topics Covered in This Chapter

  • Generally accepted accounting principles
  • Accrual versus cash accounting
  • Accounting for inventories
  • Depreciation and its several methods
  • Capitalizing leases
  • The principle of historical cost and its implications
  • Cost accounting and its uses

CHAPTERS 1 AND 2 EXPLAINED the financial statements used by businesses and how you can use them to assess managerial performance and financial soundness. Mastery of these will help you at many points in your business career. As a consumer of financial information, you will also benefit from understanding some important accounting concepts that shape financial statements, particularly the ones covered ...

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