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You are required to submit a 2000 word (final deliverable) showing the usefulness as well as the limitations of accounting concepts through an analysis of the financial accounts for a trading company of your choice. Think about the information in financial statements, analyze and use the information that the financial statements contain to show your understanding of the implications of the following accounting concepts:
Usefulness And Limitations Of Accounting Concepts On Toyota Company
Length: 8 pages (2249 Words)
Usefulness and Limitations of Accounting Concepts on Toyota Company
The accounting concept of money measurement, also referred to as measurability concept, explains that only the transactions that are measurable in monetary terms can be recognized in the financial statements (Duchac, Warren, & Reeve, 2011). This concept is popularly used by the Toyota Company to come up with the company financial statements. The company calculates its productivity and profitability by analyzing all the factors that take up money and those that bring an income to the company. This helps the Toyota Company to balance its financial statements by understanding what has been consumed and what has been acquired by the company in monetary terms (Fasb.org, 2015). The money measurement criteria is conducted by the Toyota Company by analyzing the money spent on the acquisition of raw materials, the process costs, the salaries paid to the employees, and the logistics and supply cost incurred in the transportation of the company brands (Liker & Meier, 2006). The costs are calculated and weighed against the income generated from the sale of the automobile products of the company. The calculations have an advantage for the company because they help in the calculation of profitability and what needs to be adjusted to ensure that the company continues running smoothly and profitably.