Laws and Principles that Govern Accounting in Gold Coast

Accounting plays a critical role in businesses by giving financial information, analysis and reporting. Accounting is usually governed by specific laws and principles, depending on the region you happen to be in. In Gold Coast, for instance, there are quite several laws that assist in bringing transparency, accuracy and compliance in accounting. Let us discuss some of the common laws and principles that one needs to observe while practicing accounting in Gold Coast, and some of the most common application areas of accounting.

Seven most common laws and principles governing accounting in Gold Coast

Accrual basis:

This accounting principle requires that any transaction should be recorded immediately regardless of whether cash is being received or paid.

Principle of consistency:

There should be no fluctuation in numbers when practising accounting. The information should remain consistent for all parties for eternity. For example, the information on the debit side must correspond to that on the credit side and not otherwise.

Going concern principle:

This principle assumes that all the financial statements are drafted while knowing that they are going to last for a predicted future. It can only be discarded if there is proof that it will not last the estimated time.

Matching principle:

This principle requires that the expenses are recognised within the same period as the revenue that they help generate. This ensures that income and expenses are correctly measured.

Full disclosure principle:

Here, the statements should disclose all the necessary information for the clients to make informed decisions.

Cost principle:

It requires assets to be recorded with their initial costs and not the current prevailing costs.

Materiality principle:

This principle requires that an accountant should disclose relevant information that is significant to the client’s understanding of the statements.

Five most common application areas of accounting

Accounting is applied in different sectors, some of which are discussed below:

Financial reporting:

Accounting is the root aspect of coming up with financial reports as they indicate the income statements, balance sheets and cash flow statements. All this information is vital in communicating the financial position of an individual or a business.

Auditing:

For assurance to be achieved among the stakeholders the accounting firms have to audit and verify the accuracy and reliability of the financial information at all times. This helps to bring transparency and credibility to financial information.

Taxation:

Accountants must help individuals and businesses comply with the tax laws of the region they work under by assisting them in filing tax returns, thereby helping them avoid possible penalties that can become liabilities.

Management accounting:

The management of any business or organisation usually relies on accounting information to make strategic decisions and allocation of resources. In addition, the information helps them to evaluate the company’s performance and monitoring of financial performance.

Forensic accounting:

Accounting information is crucial as it helps forensic accountants to investigate financial fraud and embezzlement. The financial information provides vital evidence in a legal proceeding and gives a clear extent of the damage caused by the fraudulent deals.

So many laws and principles governing accounting in Gold Coast including accrual basis principles of consistency, going concern, matching, full disclosure, cost and materiality. Some of the most common uses and applications of accounting include financial reporting, auditing, taxation management accounting and forensic accounting. Gold Coast’s expert accounting services offer all of these.