Accounting Estimates – Corner Stone for Accounting and Audit

Author:PhD Student Alexandrina Teodora BORFOAIA, PhD Student Mariana Adriana DEACONU

JEL:

DOI:

Keywords:accounting estimates; provisions; financial statements; financial statements users

Abstract:
The article presents the accounting estimates and explains their importance for the financial statements. It also presents few solutions in order to obtain those estimates able to correctly approximate the future effects of the previous financial operations. We also try to analyze those tools able to increase the user’s confidence in the financial statements and the accounting possibilities to better reflect the value of items about the entity financial position.\r\nThe management of the entity establishes the „accounting estimates“. These estimates must be established in such a manner not to affect the financial position of the entity. There is the risk that the management estimates are incorrect, that`s why a good analyze and understanding of the hypotheses used for this purpose is necessary, un order assure the conformity with the international accounting provisions and with the real cases in relation to their application. It is necessary to identify the real purpose of the accounting estimates, to analyze their necessity and effects as well as the management involvement in the process of establishing the accounting estimates. The accounting estimates must be established with responsibility in order to assure the financial statements users that the financial statements are not considerably affected by denatured accounting estimates.

---