Accounting policies in corporate governance practice and their impact on the financial position and business performance of company

Abstract

The primary role of financial statements is to provide information to users, both internal and external, to make business decisions. The preparation of financial statements includes a number of methods and procedures that have different effects on the values ​​reported in the financial statements. The domain of accounting policies is precisely those methods and procedures, in fact rules related to the recognition and valuation of balance sheet items, as well as the preparation of financial statements. The choice of accounting policies achieves objectives that are mainly oriented towards the financial result and financial position of the reporting entity. The responsibility for the choice of accounting policies belongs to the management of the company. Their adequate choice by the management leads to a realistic view of the financial and profitable position of the company, as well as business success. The impact of applied accounting policies on the performance of companies is shown in a study conducted in companies in the Republic of Serbia, which showed differences in individual balance sheet items in groups of companies depending on the applied accounting policy.

Keywords

• financial statements
• accounting policies
• financial result