FINANCIAL INFORMATION AND MANAGEMENT DECISIONS: IMPACT OF ACCOUNTING POLICY ON FINANCIAL INDICATORS OF THE FIRM | Zendy

Gintaras Černius | Zendy; Liucija Birškytė | Zendy

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FINANCIAL INFORMATION AND MANAGEMENT DECISIONS: IMPACT OF ACCOUNTING POLICY ON FINANCIAL INDICATORS OF THE FIRM

Author(s) -

Gintaras Černius,

Liucija Birškytė

Publication year - 2020

Publication title -

verslas teorija ir praktika

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.369

H-Index - 17

eISSN - 1822-4202

pISSN - 1648-0627

DOI - 10.3846/btp.2020.9959

Subject(s) - accounting information system , depreciation (economics) , accounting , financial accounting , management accounting , accounting standard , business , cost accounting , financial ratio , accounting management , throughput accounting , mark to market accounting , economics , finance , actuarial science , microeconomics , profit (economics) , financial capital , capital formation

To be useful for decision-making accounting information needs to be of high quality. This article examines how tax accounting rules may impact the accuracy and reliability of the information contained in financial statements. The simulation model reveals that significant distortions occur in accounting information due to the choice of depreciation period and methods. Using as benchmark ratios calculated applying accounting policy recommended in Business Accounting Standards a significant divergence between ratios has been found. This finding implies that ratios calculated using accounting rules allowable for Corporate Income Tax calculation can provide misleading information and lead to unsound financial management decisions.

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