WAEC GCE – ACCOUNT

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FINANCIAL ACCOUNT

1a
I) To maintain systematic records
ii) Estimate profit and loss
iii) Facilitating rational decision making.

1b

I)Understandability

This implies the expression, GBwith clarity, of accounting information in such a way that it will be understandable to users – who are generally assumed to have a reasonable knowledge of business and economic activities

ii)Relevance

This implies that, to be useful, accounting information must assist a user to form, confirm or maybe revise a view – usually in the context of making a decision (e.g. should I invest, should I lend money to this business? Should I work for this business?)

iii)Consistency

This implies consistent treatment of similar items and application of accounting policies