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(PDF) The Importance of Financial Accounting Information

   

Added on  2021-04-24

7 Pages1008 Words147 Views
Running head: FINANCIAL ACCOUNTING PROCESSFinancial Accounting ProcessName of the StudentName of the UniversityAuthor’s Note

1FINANCIAL ACCOUNTING PROCESSTable of ContentsAnswer to Question 1......................................................................................................................2Requirement a..............................................................................................................................2Requirement b..............................................................................................................................2Requirement c..............................................................................................................................2Answer to Question 2......................................................................................................................3Requirement a..............................................................................................................................3Requirement b..............................................................................................................................3Requirement c..............................................................................................................................4References........................................................................................................................................6

2FINANCIAL ACCOUNTING PROCESSAnswer to Question 1Requirement aAs per SAC 1, the concept of reporting entities does not depend on public sector andprivate sector. The concept of reporting entities is highly connected with the objectives ofgeneral-purpose financial reporting (aasb.gov.au, 2018). According to the general purposefinancial reporting, the business entities with the legal classes are eligible for the formation ofreporting entity. Moreover, in order to become a reporting entity, the entities are required toprovide all the necessary information required by general purpose financial reporting. Requirement bAccording to the Statement of Accounting Concepts SAC 2, the main aim of thepreparation of general-purpose financial reports is to provide the users with the necessaryinformation about the reporting entities so that they can be useful for the making and evaluationof decisions related to the scare resource allocation (aasb.gov.au, 2018). Requirement cThree main factors are the separation of economic interest from management, economicor political importance or influence and the financial characteristics. Greater separation betweenthe management and ownership indicates the existence of the reporting entities. Greater politicalimportance of an entity indicates the existence of the reporting entities. The presence of financialcharacteristics of the companies indicates the existence of the reporting entity (aasb.gov.au,2018).

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