Financial Accounting Questions and Answers - PDF

Running head: FINANCIAL ACCOUNTING
Financial accounting
Name of the University
Name of the student
Authors note

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FINANCIAL ACCOUNTING
Table of Contents
Answer to Question 1:.....................................................................................................................2
Answer to Question 2:.....................................................................................................................7
Answer to Question 3:...................................................................................................................10
Answer to Question 4:...................................................................................................................14
Answer to Question 5:...................................................................................................................15
Reference list:................................................................................................................................17

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FINANCIAL ACCOUNTING
Answer to Question 1:
To,
Chairperson
International standard accounting board (IASB)
30 cannon street, London- EC4M 6XH, United Kingdom
Date: 30th April, 2018
Subject: Recommending and guiding on the improvement of effectiveness of communication.
Sir,
I am writing this letter to make some recommendations concerning the IASB proposition
relating to the effectiveness of communication after analyzing the annual report of companies.
Currently, I am seeking investments in two organizations or entities listed on Australian stock
exchange that is CBA (Common wealth bank of Australia) and NAB (National Australia bank).
It has been provided by the financial statements preparers that reporting the annual reports to its
external users is a perplexing task and therefore, the users perceive that the information is
displayed in a manner that is not sufficient and relevant for arriving at any investment decisions.
The poor organization and presentation of financial data drowns the informative and important
information presented in the annual reporting of entities (Beatty & Liao, 2014). Such situation
create difficult situation for investors in making viable financial decision. For the purpose of
making investment, I have analyzed the annual report of latest year of both the organization I am
looking for investment.

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FINANCIAL ACCOUNTING
After reviewing the annual report of both the organization that is bank, I have been able
to raise some concerns regarding their financial statements disclosures. There are not a detailed
explanatory notes and illustrative disclosures of financial data that is making it difficult for
investors to understand the financial data provided. There is a requirement for the banking
institutions to increase the effectiveness of communication through proper and in detail
disclosure of information. In terms of both disclosure and preparation of financial statements,
there is a need to standardize the presentation in accordance with the effective principles
depicted in the discussion paper that has been proposed by IASB (Warren & Jones, 2018).
I have reviewed the proposed set of effective communication principles that have been
developed by IASB (International Australian standard board). The seven effective principles
enable organization to effectively communicate the information that is presented in the financial
statements. In order for information to be effective to the users of financial statements, it is
outlined by the principles that such information should be clear and simple, specific to entity,
creating linkage to related information, highlighting important matters by organization,
comparable, free from duplication that is unnecessary and the data should be presented in an
appropriate format (iasplus.com 2018).
After analyzing and going through the annual report of both the organizations, it has been
discovered by me that the information contained therein does not provide users with the
appropriate disclosures. An annual report of both organization that is NAB and CBA does not
have any consistent segment definition and does not employ segmental approach for the
presentation of financial data (Capital.nab.com.au, 2018). All the information’s have been
disclosed in the notes to financial statements and there have not been any separate presentation
of the same. Therefore, it can be said that the relationship between available pieces of