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Financial Accounting: Theory and Practice

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Added on  2021-01-01

Financial Accounting: Theory and Practice

   Added on 2021-01-01

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FINANCIAL ACCOUNTINGTHEORY AND PRACTICE
Financial Accounting: Theory and Practice_1
Table of ContentsINTRODUCTION...........................................................................................................................3MAIN BODY ..................................................................................................................................3Three Tier process of accounting:...............................................................................................5Qualitative characteristics of financial information in context of financial reporting................5CONCLUSION ...............................................................................................................................6REFERENCES................................................................................................................................1
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INTRODUCTIONFinancial accounting means the branch of accounting pertain with all tasks related to thefinancial transactions in business operations (Cheng, 2013). Although financial accountingpertain the briefly analysation and evaluation of financial data through various measures andtechniques to quantify the results outcomes. This study comprises with the fair value of accounting, which pertain Pros and cons offair value(FV) accounting, three tier process also qualitative characteristics of financialinformation is considered in using fair value method in financial reporting. MAIN BODYThe fair value of accounting contains two different criteria namely, Pros of the fair value andCons of fair value of accounting. Pros of the fair value accounting in Globalized economy:Definition: It means that the fair value measurements make the prediction of futureaccounting earnings possible and it ensures future predictions ensures forward lookinginformation involves in fair value measures amount of balance sheet which helps in predictingrelative future realized financial performance and the ability to predict future changes in valueswill affect the value relevant for fair value. It has its several benefits as are below.Information on time: The fair value accounting uses the information for the specifiedtime period and according to current market situations. It provides the possible relevantestimations. It comprises with the essential information which helps in promoting correctiveactions (Guo, Mu and Ma, 2012). Accurate Valuation: No doubt that it ensures the accurate information about the currentvaluation from assets and liabilities. The valuation remains same when the prices are increase ordecrease. Although it provides the accuracy about current prices prevails in market to know theexact position of the organisation.More relevant information in financial statements than historical costs: Fair value ofaccounting provide the relevant information regarding the observational market prices that couldnot influenced by the managers due to less market liquidity and although it also ensures theaccurate estimation about the liquidity market prices.
Financial Accounting: Theory and Practice_3

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