Sample Assignment - Financial Accounting pdf

Running head: FINANCIAL ACCOUNTING
Financial Accounting
Name of the Student:
Name of the University:
Author’s Note:

FINANCIAL ACCOUNTING
1
Table of Contents
Concept of Reporting Entities.........................................................................................................2
General Purpose Financial Reports (GPFRs)..................................................................................2
Factors which decides a Reporting Entity.......................................................................................2
Fundamental Characteristic of Useful Financial Information.........................................................3
Enhancing Characteristics of Useful Financial Information...........................................................4
Reference.........................................................................................................................................6

FINANCIAL ACCOUNTING
2
Concept of Reporting Entities
The concept of reporting entities is covered Statement of Accounting concepts (SAC 1).
Para 40 of SAC 1 defines the term reporting entities as any entity including an economic entity
for which it can be assumed that users of financial statements exists which are dependent on the
general financial reporting standard for making resource allocation decisions. The concept of
reporting entities states that entities should prepare general purpose financial statements. The
concept includes legal entity concept which are included in the legislation of private sectors and
also includes a broad concept which deals with accountability (Palmer, 2013). The concept of
reporting entity is closely associated with information needs of stakeholders and the nature of the
general purpose of financial reports. In addition to this the concept is used in identifying
reporting entities with consideration to the stakeholders who make their decisions on the basis of
financial statements.
General Purpose Financial Reports (GPFRs)
GPFRs are annual reports which are prepared by the reporting entities on the basis of
which users make decisions about resource allocations. The reports should be prepared in
accordance with the statement of accounting policies and accounting standards which are issued
(Henderson et al., 2015). GPFRs are the basis on which decisions are based for the investment
decisions of the shareholders of the entities.
Factors which decides a Reporting Entity
The three factors which determine whether a reporting entity exist or not are given below: