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Advanced Financial Accounting (pdf)

   

Added on  2021-06-17

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Advanced Financial Accounting1

Table of ContentsAssessment Task Part A..................................................................................................................3Assessment Task Part B...................................................................................................................5Assessment Task Part C...................................................................................................................7Assessment Task Part D..................................................................................................................8References......................................................................................................................................112

Assessment Task Part AConceptual framework provides the accountants with a framework for accounting standards,basis to resolve accounting disputes. IFRS (International Financial Reporting Standards) isdesigned with the aim that accounts of company can be understood across internationalboundaries. Conceptual framework connects all aspects of inquiries like defining a problem, datacollection, data analysis and purpose. Conceptual framework is required for development ofprinciple based accounting standards for the preparation of financial reports.Qualitative Characteristics of Financial statements not satisfied by the current reporting practicespursuant to IFRS [CITATION ias13 \l 1033 ].Understandability It is based on the concept of classification and presentation of information in concise and clearmanner. The financial information which is not clear or understandable is of no use to the users.The information in financial reports should have supporting footnotes to clearly demonstrate thecontent. The conceptual framework aims to prepare the reports in user friendly manner for thosewho have knowledge of business and economic activities. Conceptual framework also considersthat such users may also require advice to understand complex information in financial reports.The IFRS standards are not globally accepted which makes it difficult to understand atinternational level. The principles are not common and are not understandable by the users. Thefinancial statements prepared with IFRS show only desired results that may lead to profitmanipulation [CITATION acc181 \l 1033 ].RelevanceRelevance is the important feature of any financial reporting to influence the user’s decision. Theconceptual framework aims that financial information should be based on both predictive value3

and confirmatory value. Predictive value is based on predictions and confirmatory value is basedon feedback of previous evaluations [CITATION con18 \l 1033 ].Information is defined relevant if it is able to add value to decision making process by providingcomplete aspects of information. Confirmatory value is important aspect in making financialreports.The financial reporting based on IFRS standards involves the calculation based on the fair valueconcept for measurement of values of assets and liabilities. This may lead to increase thevolatility as the assets are reported.ComparabilityIt refers to the ability of the financial information to remain useful overtime and can also becompared to financial information from other sources. Comparing the financial information isimportant to evaluate different aspects of entity’s financial position. Conceptual frameworkrecognises comparability that enables users in understanding the similarities and differencesbetween the items. It considers the fact that the comparison needs two items like financialinformation for current year and the preceding year. The financial reporting in IFRS is less detailed and complex with higher cost of implementation.The complex nature of information makes it difficult for the users to understand it and make thecomparisons. The adoption of IFRS will incur the cost of training and educating the accountants’about the principles [CITATION wis18 \l 1033 ].4

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