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Context and Purpose of Financial Reporting

   

Added on  2020-10-04

16 Pages4111 Words287 Views
FINANCIALREPORTING
Context and Purpose of Financial Reporting_1
Table of ContentsINTRODUCTION...........................................................................................................................1MAIN BODY...................................................................................................................................11. Context and purpose of financial reporting.............................................................................12. Conceptual and regulatory framework....................................................................................23. Main stakeholders of Marks & Spencer..................................................................................34. Value of financial reporting for meeting entity's objectives and growth................................45. Main Financial statement as per IAS 1...................................................................................46. Two years financial statements and interpret..........................................................................77. Differences between International accounting standards and international financialreporting......................................................................................................................................78. Benefits of IFRS......................................................................................................................89. Varying degree of compliance with IFRS by organisations across the world........................9CONCLUSION..............................................................................................................................10REFERENCES .............................................................................................................................11
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INTRODUCTIONFinancial reporting mention to the abstraction of financial information like financialstatement are disclose to management and external stake holders (customers, investors andregulators) of the company (Adams, 2017). With the help of these financial information showsperformance of the company in specific time period. In this report select the company Marks &Spencer, is a major British multinational retailer of clothing, luxury food products and homeproducts. In the report consist of purpose of financial reporting, conceptual and regulatoryframework. Identify of main stockholders and value of financial reporting. Prepare financialstatement, statement of equity and interpreted it. Difference between IAS and IFRS, benefits ofIFRS and verifying degrees of compliance with IFRS. MAIN BODY1. Context and purpose of financial reportingFinancial reporting is playing crucial role in economies world because it is disclose offinancial performance of the company. These financial reporting are provide financialinformation to management and the public to shows the performance of the company forparticular time period. In financial reports are including Income statement, Financial statementand cash flow of the company. These reports are prepare on the basis of quarter and annual. According to international accounting standard board (IASB) financial reporting areprovided financial information in accurate way (Aversano and Christiaens,2014). Execution offinancial statements and changes in financial position is main objective of financial reporting. Itis specialization to focusing on the role of financial accounting processes and principles whenprepare reporting an organization's financial statements. It is important for organisation becauseit shows financial position of the company as fractional data and these informations are usefulfor all persons whose are reltae with the organisations. Purpose of financial reportingFinancial reporting serves two primary purposes - first one is, it provide useful andauthentic data to the management of company where there is division in different departmentsand also provide information to their stake holders. This happen mainly in private limitedcompany, where share capital is sold out to the public through a stock exchange system. So these1
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investors want to know about position of the company so these information provided by financialreports. Second one is, it is helping to taking effective decision regarding to company. Whenmanagement analysis these reports so it helps to achieving overall strategies and objectives. Italso helping to know strength and weakness of an organisation. Stake holders taking decision tostay long timer in company or not (Fornaciari and Pesci, 2018). 2. Conceptual and regulatory frameworkA conceptual framework of financial reporting is present as a theory of accounting thatare prepared according to international financial accounting standard to against which practicalproblems can be tested objectively. There is including components of conceptual frame work ismeasurement and recognition concepts. These concepts are – the economic entity, revenuerecognition, full disclosure, materiality and periodic assumption. A Regulatory framework of financial reporting based on IFRS and it was designed insequence to kind of a category of general language that businesses and companies accounts areclear and comparable in international environments. In this framework need to preparation offinancial statements according to standards, these are as follows - To regulate companies behaviour and directors towards their investors. To ensure to need of financial statements to provide reasons of necessary numbers. During the process of financial reporting it helping to increases confidence. Purpose It will helping to assist the board to develop IFRS standards that are based on agreeableconcepts, after that when results are come as financial information so that is useful forcreditors, investors and other lenders (Frias‐Aceituno, Rodríguez‐Arizaand Garcia‐Sánchez, 2014). It is assist to understand all parties related to IFRS and interpret these standards. These standards are assist for preparing financial reports to acquire reconciled accountingpolicies related to transaction or other events there are not applying any standard to allowa choice of policies of accounting. Qualitative characteristics makes financial information more reliableThese characteristics are important to present useful financial information formanagement. Relevance and faithful presentation are the fundamentals of qualitative2
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