Accounting Concepts and Qualitative Characteristics of Financial Reporting

This report on Accounting for Business covers the five accounting concepts, including money measurement, going concern, dual aspect, business entity, and prudence. It also discusses the qualitative characteristics of financial reporting, such as relevance, completeness, no errors, reliability, and comparability. The report emphasizes the importance of accurate financial reporting for investors and the organization's financial health.

Accounting for Business

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
Five accounting concepts.............................................................................................................3
Qualitative characteristics of financial reporting.........................................................................4
CONCLUSION................................................................................................................................5
References........................................................................................................................................6

INTRODUCTION
Accounting for business refers to the systematic recording, recognizing, summarising,
analysing and interpretation of all the financial information which is helpful for the management
of the organisation (Dobija and et.al 2021). The following report demonstrated about accounting
concept which is used for the preparation of financial statements. Besides this, characteristics of
financial reports have been mentioned in this report.
Five accounting concepts
Accounting concepts states about all the rules, regulations and standards which has to be
followed by each and every organisation while preparing financial statements. in short they are
principle which has to get applied on the records of financial transactions.
Money measurement concepts
Accounting is usually deals with the all items who can be expressed in monetary terms.
one of the biggest advantage of money is that it can be denominate the actual value of items and
resources which has been hold by the organisation. when the management is familiar with the
monetary value of their resources then they can easily put them into the financial statements of
the company whether it is a balance sheet or any other income statements.
Going concern concept
This concept is being followed by every organisation because every company wants that
they will conduct their business for life long. in simple, there is no intention of the company that
they are going to shut down in the near future. so this concept is very important for the
preparation of financial statement. This concept state about the value of assets of the company
which will help the investors to know that company has sufficient asset and it will not be going
to shut in the future.
Dual aspect concept
As per the rules of accounting it has been stated that every transaction has two aspects
and both will impact the balance sheet of the company (Yuniarti and et.al 2020). For instance, if
company purchases any assets just like; Machinery then it should have two impact on the
balance sheet. Firstly, it will increase the assets and on the opposite it will decrease the cash as
well.
Business entity concept

This is one of the important concept for the preparation of financial statement. According
to this concept business owner and business is two different entities. For this reason, owner can
claim for their money which they have invested in the company. But in case of sole proprietor
and partnership, this concept does not work. Apart from this for limited companies’ legal
distinction is necessary which will directly impact the financial statement of the company.
Prudence
This concept works on finding errors which has been done in the past by any of the manager or
owner. so this concept is related with the errors which has impacted the overall operations and
financial statements of the company. It also refers to the anticipated loss that has occurred to the
company in the past and how this has impacted the balance sheet and income statement. it is the
concept that helps in prevailing normal.
Qualitative characteristics of financial reporting
Qualitative characteristics refers to all the attributes which makes the financial information
more fruitful and useful for the users whether they are the internal users and external users. there
are two major characteristics present for financial reporting which have been mentioned below:
Relevance
In the accounting term, the meaning of relevance is to create difference in decision
makers. all the relevant information is highly capable of creating a difference to decision makers
(Ashtab,and et.al 2020). relevance information helps the management to make relevant decision
for forming financial report.
Completeness
It is very important that investor can understand everything by seeing the financial report
of the company so it is very important that financial reports must be complete and clear so that
anyone can understand this accurately.
No errors
As financial report represents the financial health of the company so it is again important
that financial report do not carry any kind of errors and mistakes otherwise company has to
suffer loss. on the other hand, financial report is important for the perspective of investors as
well. If investors found any kind of error in the report, then there are high chances that they may
not make further investment and company do not get any new investors. besides this, Company
can lose its existing investors as well. so it is the responsibility of management that they make

sure that financial report should be free from accuracies and errors and do not produce wring
information.
Reliability
While the information that material, bias and not misleading about their resources. In
such kind of activities this could also help them for knowing about faithfully representing
transaction and many other events. In such things this could also known for the proper
communication and that could also produce estimates and uncertainties through proper
disclosure.
Comparability
The information about the comparable with the high financial information and that could
also make the business for high impact. This can be used for the trends in performance and
making their financial position of the reporting more about their high process. This impact could
take their financial position and make effective goals and objective.
CONCLUSION
From the above report it had been seems that, accounting for business might be important
for the organization. While that could help the business for knowing about their financial
position about how they have to keep their investments. In such kind of activities this could also
include the proper position for taking the high impacts and make sure for keeping more some
better things and that could also led them for with their position. Qualitative characteristics that
could important for the business in which they can keep their proper sources for working and
also make sure for knowing those high impact over for working. The effective goals and
objective for which the ethics issues can be also solve for the organization. Along with this
working with more focus in keeping that could keep them for working with high effective terms
and policy for the organization.

REFERENCES
Books and Journal
Ashtab, A. and Ahmadi, A., 2020. Relationship between Readability of Financial Reports and
Stock liquidity. Journal of Financial Accounting Knowledge.7(3). pp.167-194.
Dobija, D. and Puławska, K., 2021. The influence of board members with foreign experience on
the timely delivery of financial reports. Journal of Management and Governance, pp.1-
27.
Yuniarti, T., Widhianningrum, P. and Sulistyowati, N.W., 2020. A study of accounting learning
achievements using emotional intelligence and learning behavior. Assets: Jurnal
Akuntansi dan Pendidikan.9(1). pp.52-60.