Project on Financial Reporting and Its Principles

Added on -2020-06-06

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INTRODUCTIONFinancials are one of the essential aspect for every company in which differentinformation involved like cost, profit, expenses, payments etc. Process in which financialstatements are framed and then published among all internal and external stakeholders isconsidered as financial reporting. The current project shows about objectives of the financialreporting along with its basis principles used for completing this specific procedure. Apart fromthis, with the help of Trial balance of Rita Plc Basic financial statements are prepared for theyear ended 31st December 2016. The study reflects on the business performance of Glaxo SmithKline (GSK) enterprise from accounting year 2016 to 2016. Besides these, difference among IASand IFRS is shown along with benefits of IFRS for an organisation. 1. Context as well as objectives of financial reportingWhen the company uses financial reporting in the workplace then become beneficialdifferent ways. Further, its several objectives are mentioned below:Key purpose of the financial reporting is to provide those kinds of information to thecompany which helps to make an effective decision.It helps to the management and investors both in order to assess or track cash availabilitywithin the workplace. On the basis of this, creditors and suppliers also make fruitfuldecision towards the company (Objectives of financial reporting, 2015). Information related to the economic sources of the company also provided by financialreporting. Such information include liabilities, equity of owner etc. Another objective of financial reporting is to provide statutory auditing informationwhich becomes change with facilitates audit. For identifying various scandals and malpractices incurred within financial statementsand resolving them the financial reporting is an important aspect. 2. Evaluating different framework and its key principlesIn the financial reporting various frameworks included which regulate to the wholeprocess and amend required changes. On the basis of this, the management able to preparefinancials and publish in the market using legal rules. Further, any of the stakeholder easily able1
to understand and analyse the statements of financial of the company. There are variousprinciples associated with financial reporting which are listed out below:Expense principleCost principleObjectivity principleConsistency principleMatching principleRevenue principleGoing concern principle Separate entity assumptionContinuity principleUnit-of-measure assumptionWhen looking at the qualitative aspect then it helps to make clear explanation about thebusiness and its performance in regarded industry. The quantitative considers only numericaldata which can be understood by only financial employees (Reheul, Van Caneghem andVerbruggen, 2014). On the other side, qualitative supports to both kinds of the people likefinancial or non-financial for assessing performance and take fruitful decisions towards theorganisation. Further, the qualitative kind of information helps to provide reliable as well asappropriate data to the stakeholders. 3. Key stakeholders of an entity and benefits to them of financial informationFinancial information of the company always used by different stakeholders in properway for taking better decisions. Furthermore, ways through which basic stakeholders considerfinancial information are described below:Managers: One of the important internal stakeholders of an organisation are managerswho make decisions for the business using financial information (Nobes, 2014). In this,they decide about investment making in any new project or other alternatives, producemore products, increase salary or wages etc. 2

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