Features of Financial Statement and Reporting Framework

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By student name
Professor
University
Date: 25 April 2018.
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Contents
ASSESSMENT PART A...................................................................................................................................3
ASSESSMENT PART B.............................................................................................................................5
ASSESSMENT PART C.............................................................................................................................7
ASSESSMENT PART D.............................................................................................................................8
References.................................................................................................................................................10
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ASSESSMENT PART A
All the information disclosed in Financial Statement through the balance sheet, profit & loss
account and the cash flow statement helps the stakeholder and investor to take all business and
investment decisions. However, each information included in financial statement may not be
useful for financial user and investor and or not relevant for decision-making purposes (Belton,
2017). However, in order to fulfil the basic objective of helping the investor to take all future
business decisions, all the relevant financial and non-financial information must be included in
financial statement. The financial statement must possess the below mentioned features.
 Understand ability all the information included in financial statement must be true and
free from any confusion from the perspective of end user. The preparer should keep in
mind at the time of preparation of financial statement all the information should be
presented in such a manner that user can easily analyse the impact of those information
on their business decision (Bromwich & Scapens, 2016). Here user means the person
who is having basic knowledge in the field of finance, taxation, law and accounts and has
a basic expertise to read and understand the impact of information disclosed in financial
statement. True and correct disclosure of information would help the investor to take best
possible business and investment decisions. In case any information included in financial
statement, which seems to be complex and it is not easy for common user to understand,
the impact of those information should be shown via additional information to avoid the
confusion.
 Relevance: All the information included in financial statement should be relevant for
user and helps in decision-making purpose. Mere presentation of data in financial
statement is not material for decision making if those data is do not give meaningful
information and helps in decision making (Boccia & Leonardi, 2016). Therefore, the
preparers of financial statement should focus on quality of information in place of
quantity of information and include both financial and non-financial information, which
affect the decision of decision maker.
 Reliability: The financial statement of any organisation cannot be completely free from
the error and mistakes, however this can be minimized with proper care and due
diligence. The financial statement must not be affected due to any personal prejudice and
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