Accounting and Budgeting- Assignment

Accounting and Budgeting

Question 2
a)
ABC Company Ltd has to prepare its financial statements as per the conditions and terms of
the Public Finance Act 1989 and complying with New Zealand generally accepted accounting
practice and Treasury Instructions (Treasury, 2018). The accounting policies are being
selected and implemented in such a manner that ensures that the results of financial
information fulfil the concepts of reliability and relevance. The financial statements also
need to be prepared as per the Public Sector Tier 1 PBE Accounting Standards. The standards
are being relied on the International Public Sector Accounting Standards.
b)
ABC Company Ltd has to prepare and present the general purpose of the financial statements
as per the NZ IFRS. The standard explains the basis for the preparation of financial
statements for ensuring comparability with the previous period financial statements of an
organization with the financial statements of other organizations (Xrb, 2007). The financial
statements should present the financial performance financial position of the organization. It
should provide information and data about the financial performance, cash flows and the
financial position of the organization which is useful to many users for making the economic
decisions. The financial statements should provide information about the liabilities, assets,
equity, expenses, income, cash flows and distribution and contribution by owners. Thus, the
financial statements should consist of a statement of financial position, statement of changes
in equity, statement of profit or loss, statement of cash flows and notes for an accounting
period. The organization should present each material class separately of similar items
(Phylaktis, 2014). The items of dissimilar function or nature can be presented separately
when they are immaterial. The organization should not offset liabilities and assets or
expenses and income unless permitted or required by an NZ IFRS.
The financial statements should present true and fair financial performance, cash flows and
financial position of an organization. The organization has to make an evaluation of the
ability for continuing as the going concern of the organization while preparing the financial
statements (Holton, 2012). The organization should disclose important accounting policies
consisting of measurement basis used during the preparation of the financial statements and
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