Answered

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As you mentioned, there are several assumptions and estimates which a company must make in the process of providing financial information as part of their financial statements. Could you provide a couple of specific examples of such assumptions or estimates and explain how the accounting rules describe the procedure for calculating those items?

Sagot :

GinnyAnsweridn

Final answer:

Financial statements involve assumptions and estimates that impact reporting. Key examples include depreciation and bad debt allowance.


Explanation:

Assumptions and estimates in financial reporting:

  1. Depreciation: Companies estimate the useful life of assets and the method of depreciation to allocate the cost over time. Accounting rules specify various depreciation methods like straight-line or double-declining balance.
  2. Bad debt allowance: Estimating the amount of accounts receivable that may not be collected is crucial. Accounting standards require companies to use historical data and economic conditions to make this estimate.

Learn more about assumptions and estimates in financial reporting here:

https://brainly.com/question/36394992


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