Accounting Theory and Issues

Running head: ACCOUNTING THEORY AND ISSUES
Accounting theory and issues
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1ACCOUNTING THEORY AND ISSUES
Table of Contents
1.0 Introduction..........................................................................................................................2
2.0 Objectives of the general purpose financial reporting.........................................................2
2.1 Useful information for making decision..........................................................................3
2.2 Prediction of cash flows...................................................................................................3
2.3 Economic resources and changes in resources and claims..............................................3
3.0 Elements...............................................................................................................................3
3.1 Asset.................................................................................................................................4
3.2 Liabilities..........................................................................................................................4
3.3 Equity...............................................................................................................................4
3.4 Revenues..........................................................................................................................4
3.5 Expenses...........................................................................................................................5
4.0 Recognition and measurement.............................................................................................5
4.1 Assumptions.....................................................................................................................5
4.2 Principles..........................................................................................................................5
5.0 Qualitative characteristics....................................................................................................6
5.1 Primary.............................................................................................................................6
5.2 Secondary.........................................................................................................................7
6.0 Conclusion............................................................................................................................8
Reference..................................................................................................................................10

2ACCOUNTING THEORY AND ISSUES
1.0 Introduction
Conceptual framework associated with general purpose financial reporting provides
IPSASB (International public sector accounting standards board) with various concepts for
strengthening the development of IPSASs (International Public Sector Accounting
Standards). It deals with various concepts required for presenting the general purpose
financial reporting (GPFR) in accordance with the accrual accounting basis. Various concepts
required to be considered includes objectivity, recognition criteria, qualitative characteristic,
elements, financial statements and constraints (A Review of the IASB’s Conceptual
Framework for Financial Reporting 2018).
Boral Limited, the ASX listed company is engaged in manufacturing and supplying
the construction materials all over Australia, Asia and United States. It delivers blocks,
asphalt, bricks, concretes, cementitious materials, retaining walls, pavers, plasterboards, roof
tiles, stones, window, masonry, roofing, fly ash and material technical. Apart from that is is
engaged in landfill, property and transport activities (Boral.com.au 2018).
2.0 Objectives of the GPFR
The financial statement of the company represents consolidated results of the
company. It is a for-profit company that is limited by the shares and domiciled and
incorporated in Australia and company’s shares are traded in ASX. It is observed from the
financial report of the company for the year ended 2018 that the GPFR is prepared as per the
requirement of Corporation Act 2001 and AASs (Australian Accounting Standards) adopted
by AASB (Australian Accounting Standards Board). Further, the CFS (Consolidated financial

3ACCOUNTING THEORY AND ISSUES
statements) of the company is complied with the IFRS (International financial reporting
standards) adopted by IASB (International Accounting Standards Board).
2.1 Useful information for making decision
Purpose of financial reporting by publicly held entities are to provide the useful
information of the entity to the users for enabling them to make appropriate decisions based
on the accounting data of the company.
2.2 Prediction of cash flows
Conceptual framework requires the financial statements to be presented in such a way
that the amount of cash flows can be predicted from it. From the cash flow statement of the
company for the year ended 2018 it can be found that the cash balance from each activities
like operating, investing and financing activities are clearly mentioned (De Villiers, Rinaldi
and Unerman 2014). Further, the cash balances at the beginning of the year as well as closing
of the year are mentioned clearly.
2.3 Economic resources and changes in resources and claims
As per the compliance of conceptual framework financial statement shall provide
clear information as regards to the available resources of the entity, sources through which
the resources are generated and the changes in the resources. It is noticed from the company’s
financial report that entity’s financial statement clearly stated the changes in resource levels
and its generation source (Garrett, Hoitash and Prawitt 2014).
3.0 Elements
As per the requirement of GPFRs the financial statements shall include various
elements like asset, liabilities, equity, revenues and expenses to provide proper information to
the users. The entity recognises any element in its financial statement when its value can be