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Purpose of Financial Reporting - PDF

   

Added on  2020-10-22

13 Pages3727 Words149 Views
FINANCIAL REPORTING

Table of ContentsINTRODUCTION...........................................................................................................................1MAIN BODY...................................................................................................................................11. Purpose of financial reporting.................................................................................................12. Conceptual Framework...........................................................................................................23.Main Stakeholders of Marks & Spencer.................................................................................34. Value of financial Reporting...................................................................................................45. Financial Statements As per IAS............................................................................................46. Two years financial statements of Marks & Spencer..............................................................67. Difference Between International Accounting Standards (IAS) and International financialreporting Standards (IFRS).........................................................................................................78. Benefits of International Financial Reporting Standards........................................................8CONCLUSION................................................................................................................................9REFERENCES .............................................................................................................................11

INTRODUCTIONFinancial reporting mention to the communication of financial information, like creditorsand investors. Financial reporting is using by companies for issuing financial statements. Ingeneral way financial statements sets of statements of owner's equity, incomestatement,statement of cash flow and balance sheet, but financial reporting is much more broadthan just as set of financial statements. In this context chosen company is Marks & Spencer, is aBritish multinational retail company founded in 1884. Apart from investment banking, Marks &Spencer is organised into four core businesses: corporate banking, investment management,wealth management and personal banking. This report covers context and purpose of financialreporting and identify main stakeholders of Marks & Spencer and describe benefits of them.Value of financial reporting for meeting of objectives and growth of Marks & Spencer andinterpretation of financial statements.1. Purpose of financial reportingThe purpose of financial reporting is to deliver financial information to the stakeholdersand lenders for business. According to FTES financial reporting have many purposes they are asfollowing -a. Give information to management of Marks & Spencer which is utilised for the purpose ofdecision making, planning, analysis and benchmarking.b. Providing content to creditors, investors, debt provider and promoters which is used to them tomale rational and prudent decisions regarding investments, credit (Nobes, 2014).c. They are providing information to organization for how to using and procuring variousresources.d. Providing information of economic resources of organization to claim these resources and howto claims and those resources change according to particular time.f. Providing information to the statutory auditors which in turn facilitates audit.g. It helps to management to inhabit in impressive decision making concerning the Marks &Spencer objective and whole strategies. The data revealed in this reports can help themanagement recognize the strengths and weaknesses of the company. h. Financial reporting provides essential information of financial health activities and health to itsstakeholders including government regulators, potential investors, shareholders and consumers. 1

2. Conceptual FrameworkThe Conceptual Framework for financial reporting describes the concepts and objectivesfor general purpose of financial reporting. It is a practical tool that helps the InternationalAccounting Standards Board to develop requirements in IFRS standard based on consistentconcepts (Rajgopal and Venkatachalam, 2011), 2018Level of compliance with IFRS, 2016).Consideration of these concepts, in turn, should result in the board developing IFRS standardsthat require entities to provide financial information that is useful to creditors, investors andlenders.PurposeTo assist the preparers of financial reports to develop consistent accounting policies fortransactions or other events when no standard applies or a standard allows a choice ofaccounting policies.To assist all parties to understand and interpret standards.To assist the board to develop IFRS standards based on consistent concepts, resulting infinancial information that is useful to lenders, creditors and investors.PrinciplesThe principle of all income and expenses are categorized and included in the statement ofprofit and loss.The principle of income and expenses also including other comprehensive income in thehead of Recycling to describe that one period are recycled to the statement of profit andloss in a upcoming time period when doing so results in the statement of profit and lossproviding true representation and more faithful information.Qualitative CharacteristicsRelevance Information is relevant if it is capable of making a difference to the decision made byusersFinancial information is capable of making a difference in decisions if is has predictivevalue or confirmatory value (Ball, Jayaraman and Shivakumar, 2012).Faithful RepresentationInformation must faithfully represent the substance of what it purports to represent2

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