Accounting Concepts and Qualitative Characteristics of Corporate Financial Reports

Individual projects
accounting for business

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
a. Five accounting concepts to prepare financial statements. Use of examples for making
illustration of application of accounting concepts.......................................................................1
b. Qualitative characteristics of corporate financial reports which make information useful to
users.............................................................................................................................................2
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
Accounting is a discipline to measure, process addition to communicate information about
financial together with non-financial aspects about economic business. It is how an organisation
records, organises along with understands financial information (Schneider, 2018). In business,
accounting assist to plan growth, pay right amount of taxation, holds accountability, guides
decision making, measure new strategies and get investments or loans. The report discusses
various accounting concepts to prepare financial statements. It also discusses various qualitative
characteristics of financial statements of a corporate.
MAIN BODY
a. Five accounting concepts to prepare financial statements. Use of examples for making
illustration of application of accounting concepts
Accounting concepts could be termed to general conventions that are applied by
accountants at the time recording events and preparing financial reporting. Objective of
accounting concept is to provide information which is useful and relevant to prepare reporting
statements. It deals with legislations and standards needed for satisfying requirements of all
stakeholders. Below is discussion of five accounting concepts used in financial statement
preparation:
Going concern concept: Within accounting, an organisation is forecasted to continue
transactions for fairly long term as well as carry out commitments, responsibilities and
obligations. Going concern concept says that business will never force to stop its functioning as
well as liquidate assets on the basis of fire sale prices. For instance, an organisation purchase
plant and machinery at 50000 £ and life span is 12 years. As per the concept, each year some of
the amount will be displayed as expense and balance amount as asset.
Realisation concept: The concept articulates that revenue from transactions of a company
are included in financial statements when they are realised. Realisation refers to creating legal
right to receive funds (Namazi and Rajabdorri, 2019). Selling products is realisation, however,
receiving order is not. For example, a customer makes payment of 5488 £ in advance for
customer deigned commodity. In this, the company does not realise 5488 £ revenue till work on
commodity is complete. Thus, 5488 £ is recorded as liability initially, which is further shifted to
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