Abstract:

Economic activity aims to optimize relationships of balance value between effort and effect, income and expenses, assets and their sources. Controlling these relationships involves the mandatory use of the accounting information. The article purpose is to prove that the accounting information is not limited to a retrospective presentation of the financial position and the performance of an entity. The accounting information allows predictions to be formulated because the environment in which the entity acts is characterized by the irreversibility of time. The accounting information has as a main objective the creation of a common language for the investors and the managers, creating a bridge between the investors and the entity’s activity. Most of the times, during the evaluation, the accounting methods are, by their nature, conservative and they follow the caution principle. Opposed to the evaluation, when we speak about the accounting estimation, there is a significant freedom of action when choosing methods.