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Advanced Financial Accounting : PDF

Added on - 31 May 2021

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1By student nameProfessorUniversityDate: 25 April 2018.1|P a g e
2ContentsASSESSMENT PART A.............................................................................................................................3ASSESSMENT PART B.............................................................................................................................5ASSESSMENT PART C.............................................................................................................................6ASSESSMENT PART D.............................................................................................................................7References...................................................................................................................................................92|P a g e
3ASSESSMENT PART AThe information which is being disclosed through the financial statements via the profit and lossaccount, the balance sheet and the cash flow statement enables the decision maker and theinvestors to take the investment decisions. However, the entire thing which is being disclosed inthe financial statements may not be of use to the end users and may not prove to be relevant forthe decision making purposes[ CITATION Biz17 \l 1033 ]. However, there are some minimumfinancial andnon financial information which needs to be a part of the financials so that decisionmaking becomes easy. Some of the pre perquisites for these type of information include:1.Understandability: The information which is being disclosed and presented in thefinancial statements should be clear and should not create confusion in the minds of theend user. It should have one meaning and the user should be able to understand andinterpret the information better. Here, user means the person having the basic knowledgeof finance, accounting and taxation and has the business intelligence and wisdom to readand understand the financial statements[ CITATION Def17 \l 1033 ]. Only if the informationbeing disclosed in the financial statementsare free from ambiguity, the user would beable to draw conclusion from the information given and take the decisions to invest ornot. In case any portion of the financial statements is having information that is complex,then the same should be supported by the necessary notes and disclosures to avoidconfusion and misunderstanding.2.Relevance: The information disclosed should be relevant to the user and should be addingvalue while decision making. It should not be disclosed for the sake of disclosure andshould not be vague and redundant as it defeats the very objective of the conceptualframework of accounting. The preparers of the financial statements should be aware ofthe fact that the enormous and vast quantum of data only compromises with the qualitywithout adding value. Thus, it should be conclusive and the user must be able to find outmeaningful inferences out of the same[ CITATION Bae17 \l 1033 ].3.Reliability: The financial acocunts of any entity cannot be completely free from the errorsand the misstatements, however, the same can be minimised so that the accounts preparedgives the accurate view to the user. While preparing the same, personal prejudice andbiasness should be kept aside and it should be shown in its truest form. The users expectsall the quantifiable information to give a true and fair view of the accounts and in case,3|P a g e
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