Why are there rules in accounting?
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Real eli5:
you know how there are rules about how math works? 2+2 must always equal 4. If you don’t follow the rules correctly, you get wrong answers. Accounting is just a special form of math. Every accountant is supposed to use the same rules so that other people can trust that the final numbers are correct.
Also, you know that for big math problems, your teacher will make you “show your work”. They do this so they can make sure you understand the right way to get the answer and that you can apply the rules when you get a new problem. Much of accounting consists of ” showing your work “.
An accountant may, for example, list the value of property (like a company truck) as being lower this year than it was last year. This is because an old used truck isn’t worth as much as a brand new truck. You don’t want the accountant to just guess what the truck is worth, so there are sets of rules for how much value that property loses each year. When the accountant lists this years value for the truck, they will also make a note that is is based on its starting value, its age and which discount rate they used to get to the final answer
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