Assignment on Financial Reporting (Solved)
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Added on 2021-01-02
Assignment on Financial Reporting (Solved)
Added on 2021-01-02
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Financial Reporting
TABLE OF CONTENTSIntroduction......................................................................................................................................41, Assessment of each of the concepts and assumptions which listed under fundamental andqualitative characteristics............................................................................................................42. Application of assumptions and concepts of financial statements which are important forascertaining the financial information.........................................................................................6CONCLUSION................................................................................................................................7REFERENCES................................................................................................................................8Online..........................................................................................................................................8
Introduction The report will include about the financial reporting which sin useful for the users tomake important decisions and the report will also explain about the different concept which helpin ascertaining the Financial information from appropriate financial statements.1, Assessment of each of the concepts and assumptions which listed under fundamental andqualitative characteristicsAccording to International Accounting Standard board (IASB) Conceptual framework isbasically an analytical tool having several variations and contexts. This can be applied ondifferent categories of work which require overall picture (Drake, Roulston and Thornock,2016). Generally this is used to make conceptual distinctions and organizing the ideas by settingthe basic theories of accounting framework will give the way for development of new accountingstandards.Basic objective of financial reportingThe main objective of the financial reporting is to provide the useful information to theusers of financial reports for their decision making and to ascertain the financial position of thebusiness, cash flows of the organisation. The users can be internal (shareholders, managers) orexternal (investors, creditors, customers, government etc.)The gap in why of accounting and how accounting is been doneAccounting is done by organisation for ascertaining the useful information about thefinancial health, financial performance, and financial position and cash flow of the business. Italso helps in making the important decision regarding the money to invested in business, orlending money to it (Granof and et.al., 2016). It is important to record all the transactions forascertaining the actual financial position of the business.Accounting is the process is series of activities which starts from recording the transactions andends with communicating the useful information to the users. There are some steps which arerequired to follow as they all are part of the accounting cycle.Steps which has to be followed:The first and foremost of the accounting process is financial transaction which includesany transaction made by business and that ca be recorded in monetary value or terms in form ofjournal entries in chronological order. These entries are posted into the ledger accounts based onthe nature of the transaction (Wood,2016). At end of the accounting period, the trial balancer is
prepared whether accounts are classified in debit or credit. After this, company have to pass theadjustment entries if they need to balance the books. The next step includes the posting ofadjusting journal entries in their correct accounts. After making all adjustment entire companyinitiates for making the financial statements which include income statement, cash flowstatement and balance sheet through which they can generate the financial position of thebusiness (Schaltegger and Burritt, 2017). The gap between objective and process of accounting isthe objective of the accounting is done for ascertaining the financial position of the businesswhereas the financial reporting system is followed foe communicating the useful information toits users which helps them in making important decisions.There are some measurement tools also through which financial statements ca bemeasured. They are; objectivity which says the financial statements must be reliable andappropriate. Another is matching concept which says that cost of the organisation and revenuemust be matched that is all the expense incurred by the business is to earn benefit and revenue.Consistency concept focus that business s should adopt one principle or concept and thy shouldbe applied in the business for long run (Wouters. and et.al.,2019). Revenue recognition conceptdepicts that revenue of the business should be recorded in books when it is earned not when itactually received or related cash is collected.Predictive value is basically the information which help users of financial statements inpredicting the trends of the business to make related decisions whereas confirmatory value issomething which is confirming or correcting any past predictions or improving the pastpredictions they made are confirmatory value.Faithful representation is the concepts in which financial statements of the business areaccurately and effectively reflecting the business condition. The Faithful representation isextended to all parts of the financial statements, tin must have three attributes that it should becomplete, neutral and error free.Comparability, understandability, verifiability and timeliness are directed towardsenhancing the relevant and faithful representation of financial information (Morley, 2016)Comparability can be done by following the same concept/principles for long to makecomparison between different years. Understandability indicates financial reports to be moreunderstandable by dictating the information in clear and presentable form so that the users can beeasily understand it. verifiability indicates that the information generated from the financial
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