Accounting Standard Report 2023

Running head: ACCOUNTING STANDARD
ACCOUNTING STANDARD
Name of the Student
Name of the University
Author Note

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ACCOUNTING STANDARD
Introduction
Each company has to follow the accounting standard while preparing the financial
statement which helps them to provide all the information to the financial user. An
accounting standard is the set of principle and procedure which help the company to form the
accounting policy in their business activities (Albu, Albu and Alexander 2014). It helps the
entity to provide better information to its financial user. Accounting standard helps the
company to improve the clarity of its financial report. Financial users usually compare many
companies’ books of account; accounting standard helps the company by providing a proper
framework in their business activities (Christensen et al., 2015). The essay based on how the
accounting standard helps the financial user to take proper decision in the business financial
report. It shows many standard and how the company implement the same in their financial
report. The standard which are there in coming discussion are AASB 101, AASB 13,
AASB116 and AASB 137.
AASB 101 – Presentation of Financial Statement
The main objective of this standard is to ensure that the company has prepared the
financial report properly for the financial user. These standard states all the guidelines
required for the preparation of the company financial statement (Brown, Preiato and Tarca
2014). As per paragraph 15 of AASB 101, it states that the company should fairly represent
the figure in their books of account. Fair presentation emphasis upon the proper recording of
company transaction and how the entity can record the same while preparing their financial
report.
The standard state an entity should provide proper disclosure in regards to the
accounting policy which it has used for the preparation of company financial reports (Chen,

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Ding and Xu 2014). It should prepare the financial statement while keeping the basic accrual
principle into consideration except for cash flow information in their business operation.
These help the users of financial reports as it state the meaning of current asset and
current liability which assists the organisation to classify same in their books of accounts
(Aasb.gov.au 2019). As per paragraph 60 it differentiates between the current and non-
current asset as this help them to prepare proper financial reporting in regards to their
operations.
As per paragraph 117 which states that company has to disclose all the accounting
policies which are used by them while carrying the business activities. The responsibility of
the entity to provide all the related information to its investors so that the user will able to
take proper decision in company business (Aasb.gov.au 2019). In paragraph 125, it states
about the disclosure which an entity should make for the assumptions taken by them in their
different activities. It should disclose the significant risk associated with the adjustment of
carrying the number of liabilities and asset in company activities.
This standard helps the user to understand company financial reports quickly as the
entity has to disclose all the essential information in their notes on account that assists all the
required information to different users of financial report.
AASB 13- Fair Value Measurement
This standard purpose is to provide an overview of fair value measurement in
organisation activities. It also states the disclosure which the company has to give in their
notes on accounts (Hoyle, Schaefer and Doupnik 2015). As per paragraph 9, Fair value is the
price which the entity will able to receive by the sale of an asset or the payment amount in
regards of liabilities.

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As per paragraph 11 of the standard, its states about the measurement related to the
fair value in asset or liability of an entity (Oulasvirta 2014). It states that specific points
should be taken into consideration while considering the asset and liabilities in their business.
As per paragraph 15 it shows that the fair value measurement takes the assumption that the
liability or asset has been exchanged in between the different market participants and its take
into consideration the other present market conditions. As per paragraph 22 an organisation
should value their financial accounts by taking into consideration the assumption which has
been used by the market participation while pricing the asset or liabilities in their business
activities (Aasb.gov.au 2019). It takes the assumption that market participant has taken into
consideration all the points while figuring out the price of asset and liabilities.
Paragraph 61 states that the entity should use proper valuation technique for the
valuation of their asset and liabilities. It has to take into consideration all the information that
is available in regards to the asset and liabilities while valuing the same in company financial
reports (Aasb.gov.au 2019). As per paragraph 91, company should provide proper amount of
disclosure which helps the investors to get proper decision in regards to entity operations.
The above points show the impact of the standard upon the company financial report
as this helps the investors to know all the information which the company has taken into
consideration for the valuation of their asset and liabilities. It should consider the level of
disclosure that is required in the notes of account and also how its should be emphasis upon
different account of the company books of account.
AASB 107 – Statement of Cashflow
The objective of these standard is to state the cash inflow and outflow in the business
activities. The user usually takes into consideration the cash aspects while taking decision in

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regards of business so this statement help them to carry proper analysis of cash flow
statement.
As per para 10 it state the presentation of cash flow in the business activities as the
company should prepare the cash flow statement properly in their books of accounts
(Aasb.gov.au 2019). The classification of operating, investing and financing activities is also
given in the standard.
The para 18 state about the methods which the company should for the preparation of
operating activities as it can be prepared by both direct and indirect method (Aasb.gov.au
2019). As per para 21 and 22 its show how the company should prepare their financing and
investing activities in their financial statement.
The para 45-47 show the components of cash and cash equivalents as how the entity
prepare its cash flow statement. It should carry proper reconciliation of the cash balance and
should disclose the same in the annual report.
The company should provide proper amount of disclosure in their account which will
help them to convey proper information to its investors and other user of company accounts
(Aasb.gov.au 2019). This show all the inflow and cash outflow which happen in company
business and how it deals with the same in their books of accounts.
AASB 15 – Revenue from contract with customers
The purpose of this standard is to formulate some principles which an organization
should apply as they should give proper disclosure in there in financial report about the
nature, timing, amount and uncertainty in cash flow and revenue which happen in the contract
with different customers (Aasb.gov.au 2019).

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As per para 9 it states how the company should record the contract with customers in
their books of accounts (Aasb.gov.au 2019). It can only record it when it meets all the criteria
mentioned in the paragraph. Para 46 state the measurement process which the organization
should use in regards of the contract with customers.
Company can identify the transaction price with help of para 47 as it show all the
norms which should be followed for the valuation (Aasb.gov.au 2019). Transaction price is
the price which an entity except to receive by the transferring of different goods and service
to its customers. As per para 110 company should provide proper disclosure in their financial
reports which help the user to know details of the contract which the entity has done with its
customers. As the company should disclose the contracts details with customers, the amount
of judgement taken by the company in regards of this standards and any asset which is been
recognised to fulfil the contract made with customers.
This standard helps the investors to get proper details of the customer from which
they able to take necessary decision in their business activities (Aasb.gov.au 2019). As the
company have to show all the details in regards of revenue of contract with customers so this
will show how the company is carrying their business activities.
Conclusion
On a final note, it concludes about the accounting standard as it helps the company for
the preparation of their financial reports. Accounting standard provides a proper framework
to a different entity which let them present a proper financial report among the investors and
another user of company books of account. It describes four accounting standard and how the
user can get benefits from the use of accounting standard in company financial reports. The
standards are AASB 101, AASB 13, AASB 137 and AASB 116. All these standards help the

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user to know various aspects of company accounting information and helps them to take
proper decision in regards to company financial health.

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Reference
Aasb.gov.au (2019). [online] Aasb.gov.au. Available at:
https://www.aasb.gov.au/admin/file/content105/c9/AASB101_07-15.pdf [Accessed 22 Sep.
2019].
Aasb.gov.au (2019). [online] Aasb.gov.au. Available at:
https://www.aasb.gov.au/admin/file/content105/c9/AASB13_08-15.pdf [Accessed 22 Sep.
2019].
Aasb.gov.au (2019). [online] Aasb.gov.au. Available at:
https://www.aasb.gov.au/admin/file/content105/c9/AASB107_08-15.pdf [Accessed 23 Sep.
2019].
Aasb.gov.au (2019). [online] Aasb.gov.au. Available at:
https://www.aasb.gov.au/admin/file/content105/c9/AASB15_12-14_COMPsep18_01-19.pdf
[Accessed 23 Sep. 2019].
Albu, C.N., Albu, N. and Alexander, D., 2014. When global accounting standards meet the
local context—Insights from an emerging economy. Critical Perspectives on
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Brown, P., Preiato, J. and Tarca, A., 2014. Measuring country differences in enforcement of
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Accounting, 41(1-2), pp.1-52.
Chen, C.J., Ding, Y. and Xu, B., 2014. Convergence of accounting standards and foreign
direct investment. The International Journal of Accounting, 49(1), pp.53-86.

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Christensen, H.B., Lee, E., Walker, M. and Zeng, C., 2015. Incentives or standards: What
determines accounting quality changes around IFRS adoption?. European Accounting
Review, 24(1), pp.31-61.
Hoyle, J.B., Schaefer, T. and Doupnik, T., 2015. Advanced accounting. McGraw Hill.
Oulasvirta, L., 2014. The reluctance of a developed country to choose International Public
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Accounting, 25(3), pp.272-285.
Wang, C., 2014. Accounting standards harmonization and financial statement comparability:
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pp.955-992.
Yu, G. and Wahid, A.S., 2014. Accounting standards and international portfolio
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