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Financial statements are usually prepared by an entity to communicate information about its financial performance, position, cash flows, and movement of equity to users and help them make decision. A statement of accounting policies is specified with these statements to help users understand how the information is collected and make it understandable and useful. In this essay, the author will attempt to explain the importance of understanding which accounting policies have been used in preparing a set of financial statements, mainly to which applied to p…
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