Describe the key accounting concepts and discuss how they enhance the Essay

Describe the key accounting concepts and discuss how they enhance the usefulness of financial statements for external users - Essay Example Three of the most critical financial statements that companies must prepare at the end of every financial year include the statement of financial position, income statement and statement of cash flow (Atrill et al. 2011, p. 62). Because users of financial statements make decisions based on the information presented in these financial statements, accountants are expected to ensure that the information presented is as accurate as possible and are in tandem with the accounting concepts and principles. Accountants are expected to follow the accounting concepts and principles in preparing financial statements to ensure that users are not misled by the adoption of practices and policies that are in violation of the accounting profession. Therefore, before publishing, financial statements, accountants are expected to ensure that the treatment of the accounts is consistent with the established accounting concepts and policies. IASB Framework recognizes a number of accounting concepts that ac countants must adhere to in preparing the financial statements. The first major accounting concept followed in preparing final accounts is the going concern concept. When preparing financial statements, accountants are expected to make an assumption that the company will continue operating in the foreseeable future without the possibility of the management ceasing operations. Therefore, when preparing final accountants, accountants must assume that will realize its assets and pay its debts in the normal course of business operations. The adoption of going concern concept is critical since it informs the external users that the management of the company has no intention whatsoever of liquidating or ceasing the operation of the firm in the near future (Atrill et al. 2011, p. 67). Adoption of going concern concept in the preparation of final accounts is critical since it shows investors that their investments are safe as the company has no intention of