Accounting Principles and Practice I

Abstract

Few of the items appearing in the accounting records of a business can appear in the financial statements as they stand. Many require interpretation in order to determine whether they are, for example, assets or expenses, both of which appear as debit items in the ledger. Furthermore, it is frequently the case that an item will only in part constitute an expense of one period, with the balance representing an asset which may be used in succeeding periods. It is the role of the accountant to allocate such items in a way which will ensure that the accounts show a true and fair view. Such an operation is by no means straightforward for in most cases the manner of allocation will be determined by expectations about future events, such as the life of a piece of plant or the success of a new development.