How do Accounting Principles Impact Financial Statements?
Accounting principles directly impact how financial statements are prepared and presented. For instance, the balance sheet must reflect the company’s assets, liabilities, and equity accurately according to these principles. Similarly, the income statement and cash flow statement must adhere to these principles to provide a true and fair view of the company’s financial performance and position. Adherence to accounting principles ensures that the financial statements are reliable and can be trusted by stakeholders.