The reports reflect a firm’s financial health and performance in a given period. If the consistency principle is not followed, the company will jump around here and there, and financial reporting Financial Reporting Financial reporting is a systematic process of recording and representing a company’s financial data. If a company follows an accounting principle, it should keep following the same principle until a better one is found. As per the accrual principle, the sales should be recorded during the period, not when the money would be collected.
For example, let’s say that a company has sold products on credit. read more in the same period it happens, not when the cash flow was earned.
For example, Apple representing nearly $200 billion in cash & cash equivalents in its balance sheet is an accounting transaction. The company should record accounting transactions Accounting Transactions Accounting Transactions are business activities which have a direct monetary effect on the finances of a Company. Source: Accounting Principles () #1 – Accrual principle:
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