Advance Financial Accounting - Assignment

Running head: Advance Financial Accounting
Advance Financial Accounting
Name of the Student:
Name of the University:
Author Note:

ADVANCE FINANCIAL ACCOUNTING1
Table of Contents
1.1 Introduction..........................................................................................................................3
1.2 Discussion............................................................................................................................3
1.2.1 The entity is a reporting entity or not............................................................................3
1.2.2 Relevance and representational faithfulness.................................................................7
1.3 Conclusion..........................................................................................................................10

ADVANCE FINANCIAL ACCOUNTING2
Executive Summary
Reporting entity is the type of entity which uses the concept of General Purpose Financial
Reporting for their dependent user ad follows the Australian Accounting Standard along with
Corporation Regulations 2001. The reporting entity must also follow the concepts of
relevancy and representational faithfulness while preparing the consolidated financial
statement to present a true picture of their previous performance in front of the dependent
users. This report analyses whether Elders Limited is a reporting entity or not and whether
they use the concepts if relevance and representational faithfulness or not.

ADVANCE FINANCIAL ACCOUNTING3
1.1 Introduction
A reporting entity follows the General Purpose Financial Reporting concept to help
their dependent user to evaluate their annual performance and then take decisions regarding
the investment purpose. The company should follow the standards of AASB and Corporation
Regulations 2001 while preparing the financial statement. The company must follow the
concept of relevant and representational faithfulness while providing the information for
preparation of annual report because it helps the entity to present a true picture of their
performance in front of their dependent users without any biasness or illegal motive. This
report shows that the company Elders Limited is a reporting entity and they follows the
concepts of relevancy and faithful representation of their financial figures in the consolidated
financial report so that their dependent users trust is retained and also they get a true picture
of company’s performance and previous strategies the company have used to gain the sales
revenue. The detailed report is presented below regarding the criteria of an entity to become a
reporting entity and how relevancy and representational faithfulness in necessary for
companies to report their financial statements to the dependent users.
1.2 Discussion
1.2.1 The entity is a reporting entity or not
Any entity is called reporting when it has many users whose decision depends on the
result of the financial report. These users are the shareholders of the company, members,
creditors, potential investors and employees of the company. These entities make GPFR
(General Purpose Financial Report). Such kinds of reporting entities are major public
companies, public interest entities like educational institutes and those major private
companies in addition to external shareholders which cannot access any other financial
information apart from annual report of the company. The entities are known as a reporting