Accounting for Business: Financial Statements Preparation & Attributes

This report provides an overview of accounting principles and their application in preparing financial statements. It begins by defining accounting and its primary aim of preserving uniformity and consistency in monetary amounts. The report then delves into five key accounting concepts: the business entity concept, money measurement concept, accounting period concept, accounting cost concept, and accrual concept, illustrating each with examples. Furthermore, it discusses the attributes of financial reports, including relevance, reliability, and faithful representation, highlighting their importance in providing valuable insights for stakeholders and decision-makers. The report concludes that accounting plays an essential role in any business, and the reporting of financial information in the form of financial statements is crucial for measuring an organization's financial performance.

Accounting for
Business

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
TASK 1............................................................................................................................................1
accounting concepts to prepare financial statements with example.......................................1
Attributes of financial report..................................................................................................2
CONCLUSION................................................................................................................................3
References:.......................................................................................................................................3
Books and Journals.................................................................................................................3

INTRODUCTION
Accounting refers to the basic assumption of the rules in order to record the business
transaction and to prepare accounts on basis of daily work and transactions (Andiola, Masters
and Norman, 2020). The primary aim of accounting in business is to preserve the uniformity and
consistency of the monetary amount. Counting simply means collecting and analysing
information derived from the business transactions which are acceptable and adaptable by the
stakeholders and all the other business. The present report will discuss five accounting principles
usually preparation of a financial statement. Further in the report significance of financial reports
are discussed.
MAIN BODY
TASK 1
accounting concepts to prepare financial statements with example
Business entity concept: for the accounting purpose business entity and the owner are
considered as the two different and independent entities (Birt and et. al., 2020). This accounting
concept in which the business and the personal transactions of an owner as separate is basis of
the finance. The four in the accounting records the books of the accounts are made on the
viewpoint of a business unit not on the persons owning the business. For example: Mr XYZ start
the enterprise by the investing £200000. The owner purchased the goods at £60000, tables and
chairs for 10000 and factory items of 10000, remaining amount of 20000 is in hand. All these
assets of enterprise not of stakeholder therefore in accounting £100000 will be treated as
business capital.
Money measurement concept: As per this concept business transactions and the form of
the money which is basically in the form of the currency of the country. Transactions are in the
terms of the Euros. This is significance of the money measurement concept which is described as
an accountant to record as it assist in recording the business dealings uniformly and also in terms
of the fiscal.
Accounting period concept: Business financial dealings are stored in books of accounts
all in the profits and business transactions will be a safety and for the particular period of time
this concept is referred as the accounting period concept basically it requires the balance sheet
and P&L account and this should be arranged regularly (Dressler and Rachfall, 2020).
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Accounting cost concept: Accounting cost concept refers to the overall amount of capital
written in financial books on their price of purchase which basically contains acquisition cost
installation and transportation but irrespective of market price. It refers to the notion with the
effect of cost on the company entity does not feel anything for acquiring an benefit this item
would not be represented into the financial books there for the Goodwill is visible in the financial
accounting only if the items purchased are intangible assets. This is useful in measuring the
depreciation on the fixed assets
Accrual concept: Accrual is basically a quantity that is still unpaid or received during the
end of financial year which means revenues are only recognisable when they are received
(Bebbington and Unerman, 2020). A user in knowing the actual expenses in the actual income
during the financial year and it also helps in the calculation of net profit.
Attributes of financial report
The objective of financial reporting is to get the valuable insights of the daily transactions,
prospectors of the debtors and investors as well as accounting professionals and standards in
order to make future investment landings and other financial decisions related to the business.
The qualitative characteristics of financial reports that are useful to a user are discussed below:
Relevance: In Accounting the meaning of relevance makes a difference to the financial decision
maker. Financial Information has a analytical value or the positive value. The analytical value
benefits a user to validate and analyse the past, future and present events (Cunningham and et.
al., 2020). When the economic data or statistics are relevant it has a capacity to manipulate the
fiscal decisions of the user also it provides time to the user to influence the others financial
decisions. The ability to utilising financial statements and their information make an assessment
more enhanced in the form it is obtainable for instance the analytical value of financial data
recorded in the financial statement is and asked if it has profit and loss disclosed.
Reliability: It is very important that information provided in the financial statements is reliable
allows the user to depend upon the information and to present it faithfully. Reliable information
is free from on purpose or a methodical bias which basically means it is a impartial under
complimentary from the errors and also they are under the materiality limits.
Faithful representation: this is another qualitative characteristic of the financial reports as the
portal of transactions it other aspects of financial statement depends only privileges and
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obligations racing and the burden stick to it. Faithful representation in the financial reporting is
predictable, calculated and obtainable statements that correspond to the consequences of
transaction. The circumstances where the entity may pass legal ownership the faithful
representation derived in access to the future economic benefits link up with the property or a
legal ownership of the item (Cunningham and et. al., 2020). This qualitative characteristic of the
financial report reflects continuing interest of the accounting to the other parties.
CONCLUSION
It is concluded from the above information that for any business accounting plays a very
essential role. Reporting of financial information into different form of financial statement is
most important part of accounting. There are different concepts used by the businesses to derive
their financial statements among which accounting cost and money measurement concept are the
priority of every business as they are helpful in measuring the financial performance of an
organisation. Hence, it is understood that financial report and its qualitative characteristics are
useful to the user using that information because they are reliable, neutral and also has a faithful
presentation.
References:
Books and Journals
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Andiola, L.M., Masters, E. and Norman, C., 2020. Integrating technology and data analytic skills
into the accounting curriculum: Accounting department leaders’ experiences and
insights. Journal of Accounting Education, 50, p.100655.
Bebbington, J. and Unerman, J., 2020. Advancing research into accounting and the UN
sustainable development goals. Accounting, Auditing & Accountability Journal.
Birt, J and et. al., 2020. Accounting: Business reporting for decision making. John Wiley & Sons.
Cunningham, B and et. al., 2020. Accounting: information for business decisions. Cengage AU.
Dressler, S. and Rachfall, T., 2020. Improved Learning Performance Based on a Flipped
Classroom Concept—A Case Study Based on the Course Introduction to Management
Accounting for Business Engineers. In Flipped Classrooms with Diverse Learners (pp.
183-201). Springer, Singapore.
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