Accounting Policies, Accounting Estimates and Its Role in the Preparation of Fair Financial Statements in Digital Economy

Abstract

The paper considers the main problems and limitations of the reliable presentation of reporting information. Ensuring the reliability of accounting information is objectively hampered by its conventionality associated with the need to give a numerical estimate of accounting objects. Subjective limitations are connected with a variety of information needs of users of reporting data, which determine differences in accounting methodology. The accounting conventionality is most evident when calculating the financial result, therefore one of the priority problems in forming reliable financial statements is the accuracy problem of financial result calculation. Equally important is the problem of recognition of contingent and evaluation assets as well as liabilities. The choice of accounting methodology at the level of accounting standards or at the level of an economic entity has a decisive influence on the reporting data presented to users: the same business transactions can be presented in completely different ways. The choice of the degree of freedom provided to economic entities during the preparation of reporting lies in the area of the distinction between global and local accounting policies. In addition, reliability of financial statements is influenced by many other factors related to the choice of accounting and depreciation policies, changes in accounting estimates, legal justification of accounting entries and many others that are also considered in the paper.