Exploring Accounting Concepts and Qualitative Financial Report Traits

This report provides an overview of accounting for business, focusing on key accounting concepts used in the preparation of financial statements and the qualitative characteristics that make financial reports useful. It discusses five fundamental accounting principles: the full disclosure principle, the going concern principle, the matching principle, the materiality principle, and the monetary unit principle. Furthermore, it examines the qualitative characteristics of financial reports, including reliability, relevance, materiality, and faithful representation, emphasizing their importance in ensuring that financial information is valuable and trustworthy for users in making informed economic decisions. The report references various academic sources to support its analysis and conclusions.

Accounting for Business

Contents
INTRODUCTION...........................................................................................................................................3
MAIN BODY.................................................................................................................................................3
(a) Discuss five accounting concepts used in the preparation of financial statements............................3
(b) Discuss the qualitative characteristics of financial reports that make information useful to users. . .4
REFERENCES................................................................................................................................................6

INTRODUCTION
Accounting is the systematic recording, measurement, and communication of money
transfers knowledge. It exposes a company's profit or loss during a specific time period, as well
as the amount and form of its financial assets. Profit and loss statement, balance sheet, and cash
flow statement are the three significant financial accounts created by accounting. Accounting is
the process that identifies, documenting, monitoring, classifying, validating, and disseminating
financial data (Shodiyev, 2020). It discloses a company's profit or loss for a specific time, as well
as the amount and structure of its financial assets, as well as its owners' capital. In this report
consist of qualitative characteristics of financial information and define accounting concepts
used in preparation of financial statements.
MAIN BODY
(a) Discuss five accounting concepts used in the preparation of financial statements
There are mentioned five basic accounting principles which is used by every type of
organisation to prepare their financial statements such as:
Full disclosure principle: The organization needs to determine all information needed in
its accounting records under the Full Disclosure Principle. The primary notion behind this entire
concept is that the financial data contained in financial statements may be relied upon by
accounting standards to make decisions. As a result, it's critical to make certain that they have
access to all of the information they need to make. It seems that this concept was designed to
guarantee that data requested by accounting principles or procedures was reported in the
accounting process. For example, the leader of the country in which the corporation does
commerce just announced that tax rates will be raised, with the rise enacting after this year. The
operations of the company, notably its revenues, will suffer.
Going concern principle: Going concern is a concept in which a company will continue
to operate for the coming years. It is usually 12 months from the commencement of operation. In
other respects, if the company does not have a going concern issue, the readers of income
statement can place their trust in the banking details given by the company by assuming the
entity will live for the next twelve months. For instance, the individual's primary services or

goods are no longer in demand in the marketplace, and sales have plummeted to near-zero levels
(Tanima, Brown and Dillard, 2020).
Matching principle: The accounting approach that is used to record and recognize
expenditure and income in financial reports is known as the matching principle. This standard
says that the earnings and costs on the financial statements are accurate for the time period in
which they were incurred. Until an entity sells things to its clients, for illustration, it generates
money while still having to spend its finished goods on its consumers.
Materiality principle: The accounting principle of materiality, often known as the
materiality idea, is concerned with the significance of knowledge as well as the magnitude and
character of operations presented in the financial statements. Financial information is significant,
according to this definition, if its removal or introduction could contribute to a participant's
judgment being influenced. Accounting reporting is the very same size and character may be
relevant to one accounting framework but not to someone else's.
Monetary unit principle: The Accounting Principle of Monetary Unit Assumption is
concerned with the assessment of entities that a company documents in its financial reports. In
the monetary unit concept, activities or even balance sheets can only be recorded if they can be
measured in monetary units. Each day, a large value of accounts happens in and by organization.
Not every transaction is accounted for in the financial information. For illustration, if a
salesperson is involved in a collision, the entity is responsible for the consequences of the crash
and hospitalization (Miglietti, 2021).
(b) Discuss the qualitative characteristics of financial reports that make information useful to
users
The fundamental qualitative features that accounting reporting should exhibit in addition
to be the topic of managerial accounting are significance and reliability, according to this
Statement. These attributes may need to be evaluated against one another, but this Statement
does not priorities over another.
Reliable: For financial data to be useful, it must be useful in supporting clients in making
and analysis of these studies about the distribution of limited resources, as well as measuring
preparers' responsibilities. Both monetary and non material should be included in a meaningful

earnings statement. Such data should be able to gain insights into the company's sales
possibilities, risks, and probable future scenarios. Prior research has found that, when compared
to balance sheet, market price provides a stronger predictor of accounting information (Sinha,
2020).
Relevance: For financial data to be useful, it must be useful in supporting users to make
and analysis of these studies more about distribution of economic resources, as well as
measuring conditions' responsibilities. Both monetary and non material should be included in a
meaningful earnings statement. Such data should be capable of entering into the company's
international possibilities, risks, and probable future scenarios. Prior research has found that,
when compared to balance sheet, market price provides a stronger predictor of financial reports.
Materiality: The nature and materiality of information have an impact on its relevance.
In certain circumstances, the quality of the research is enough to decide its usefulness. For
instance, regardless of the materiality of the new sector's results during the period ending, the
disclosure of a specific generation may have an impact on the object's evaluation of problems
and challenges. In some circumstances, both type and materiality play a role, such as the
volumes of stocks stored in each of the main classifications related to the company. When the
data is inaccurate of material has the potential to impact readers' financial choices based on
financial data, it is considered material (Kremin and Pasewark, 2020).
Faithful representation: Knowledge must accurately reflect the events and transactions
it intends to understand or could possibly be assumed to reflect in order to be considered
trustworthy. A balance sheet, for instance, should authentically portray the transactions and
activities that resulted in the asset's value, obligations, and ownership at the initial recognition, as
long as the identification requirements are met. Every accounting record has a chance of not
being a true depiction of what it claims to be. This is owing to intrinsic problems in determining
the transactions or events to be assessed, as well as inventing and using assessment and
representation approaches capable of writing information that match to those transactions and
occurrences (Schaltegger, 2020).

REFERENCES
Books and Journal
Shodiyev, A. A., 2020. ACCOUNTING IN UZBEKISTAN (ACCOUNTS). Theoretical &
Applied Science. (11). pp.55-58.
Tanima, F. A., Brown, J. and Dillard, J., 2020. Surfacing the political: Women’s empowerment,
microfinance, critical dialogic accounting and accountability. Accounting, Organizations
and Society. 85. p.101141.
Miglietti, C., 2021. Student performance in accounting courses: Do bonus points motivate
performance?. Journal of Education for Business. 96(4). pp.237-242.
Sinha, S., 2020. Blockchain—Opportunities and challenges for accounting professionals. Journal
of Corporate Accounting & Finance. 31(2). pp.65-67.
Kremin, J. and Pasewark, W. R., 2020. Research initiatives in accounting education: Providing
access to education and obtaining credentials. Issues in Accounting Education. 35(4).
pp.47-60.
Schaltegger, S., 2020. Sustainability learnings from the COVID-19 crisis. Opportunities for
resilient industry and business development. Sustainability Accounting, Management and
Policy Journal.
Karbasi Yazdi, H. and Mohammadian, M., 2017. Effect of profitability indices on the capital
structure of listed companies in Tehran Stock Exchange. Advances in Mathematical
Finance and Applications. 2(3). pp.1-11.
Manning, M., 2017. Workshop on ‘Finance, Investment and Productivity’. In Workshop on
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