Analysis of Financial Reporting

   

Added on  2020-07-23

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FINANCIAL REPORTING
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INTRODUCTIONProcedure of preparing financial statements with the help of different transactions of anorganisation and present to these in front of different stakeholders is known as financialreporting. The present report shows about different stakeholders of an enterprise who usesfinancial statements for taking profitable decisions. Apart from this, purposes as well asobjectives of the financial reporting are addressed in the current assignment. The study reflectson procedure of preparing P&L, B/S as well as statement of changes in equity for the firm RitaPlc for the year ended 31st December 2016 using trial balance. Further, advantages of theInternational Financial Reporting Standard (IFRS) are described in present project. At the end ofproject, those elements are introduced which create impact on compliance with IFRS. 1.Financial reporting is supportive for the company in order to present publish finalaccounts of it in front of various stakeholders. It is highly supportive for the management inorder to assess financial position and stakeholders as well. Further, its primary and importantpurposes are stated as follows:Key objectove of it is to give highly proper data regarding to various financials to theowner of the firm. On the basis of this, he or she easily able to know that it performs upto which extent in the industry (Costello, 2011). Therefore, fruitful decisions which arerequired to take in the workplace can be easily made.In order to keep all the financial statements of an entity legal, the financial reporting is animportant tool.For reducing issues like scandals, malpractices etc. in the final accounts also it is used bythe businesses. At the time of framing the financial reports in proper direction, various complexities andissues incurred which are resolved with the help of financial reporting. With reference to shareholders, the financial reporting provides an outline of profitability,liquidity and cash position of business to them. Further, profitable decisions for makinginvestment in the business are taken by shareholders in an appropriate way (Nobes,2014).1
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2.The conceptual and regulatory framework of financial reporting is highly used by thebusinesses due to helping in order to prepare effectual final reports. With the help of suchframework the management can easily examine its position in the industry in context to thefinancials. Moreover, these are needed for making all the financial statements and publish themin legal manner. In order to reflect actual performance of the company in front of all the peoplewho are directly or indirectly associated with it, the financial reporting is required formanagement. It has some basic principles which are used by firms at the time of preparing andreporting various financials, listed below:RevenueExpenseMatching Cost ConsistencyObjectivity Continuity Going concernUnit-of-measure assumptionSeparate entity assumptionThe qualitative characteristics are highly supportive for the firm in order to make variousreports regarding to financials reliable. The reason is that, it states clear and proper outline of theoverall business which are actually incurred with the firm. Under the quantitative, someassumptions and estimations are made like budgets etc. which sometimes createmisunderstanding among stakeholders (Li, 2010). Hence, it can be said that qualitative kind ofinformation create reliable data of the firm in front of various stakeholders. 3.Financials of an enterprise are mostly used by the stakeholders whether they are internalor external. The reason is that, it helps to make an effective as well as fruitful decisions towards2
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