Archive | Financial Reporting

Financial Reporting Framework

Accounting Assumptions: Underlying assumptions for the preparation and presentation of financial statements are accrual and going concern. Accrual assumption: The effects of transactions and other events are recognised when they occur (and not as cash or its equivalent is received or paid) and they are recorded in the accounting records and reported in the financial […]

7 Major Limitations of Financial Reporting

The following points highlight the seven major limitations of financial reporting. 1. The objectives of financial reporting are affected not only by the environment in which financial reporting takes place but also by the characteristics and limitations of the kind of information that financial reporting, and particularly financial statements, can provide. The information is to […]

Financial Reporting: Concept, Objectives and Benefits

In this article we will discuss about Financial Reporting:- 1. Concept of Financial Reporting 2. Objectives of Financial Reporting 3. Developments on Financial Reporting Objectives Concept of Financial Reporting: Financial reporting may be defined as communication of published financial statements and related information from a business enterprise to third parties (external users) including shareholders, creditors, […]

Financial Reporting and Financial Statements

The upcoming discussion will update you about the difference between financial reporting and financial statements. 1. Financial statements are a central feature of financial reporting. They are a principal means of communicating accounting information to those outside an enterprise. Although financial statements may also contain information from sources other than accounting records, accounting systems are […]

Top 11 Qualitative Characteristics of Accounting Information

The following points highlight the top eleven characteristics of accounting information. The characteristics are: 1. Relevance 2. Reliability 3. Understandability 4. Comparability 5. Consistency 6. Neutrality 7. Materiality 8. Timeliness 9. Verifiability 10. Conservatism 11. Substance over Form. Characteristic # 1. Relevance: Relevance is closely and directly related to the concept of useful information. Relevance implies […]

Developing FASB’s Conceptual Framework: 4 Components

The following points highlight the four major components of Financial Accounting Standards Board (FASB) in developing conceptual framework. The components are: 1. The Objectives of Financial Reporting 2. The Qualities of Useful Information 3. Elements of Financial Statements 4. Recognition and Measurement. 1. The Objectives of Financial Reporting: The FASB’s first Statement of Financial Accounting […]

IASB’s Conceptual Framework: Subject-Matter and Uses

In this article we will discuss about the subject matter and uses of IASB’s conceptual framework. Subject-Matter of IASB’S Framework: IASB’s conceptual framework deals with: (a) The objective of financial statements; (b) The qualitative characteristics that determine the usefulness of information in financial statements, (c) The definition, recognition and measurements of the elements from which […]

Significance of Company Annual Report

In this article we will discuss about the significance of company annual report. Company Annual Report has become a significant medium of corporate reporting today, although information about a company’s affairs can be communicated through other media also, e.g., prospectus, financial press release, interim report, and personal contact with company officials. Prospectuses are made available […]

Formulating Accounting Objectives: Advantages and Limitations

In this article we will discuss about the advantages and limitations of formulating accounting objectives. Advantages of Formulating Accounting Objectives: Following are the advantages associated with having an agreed set of accounting objectives: (1) The proper evaluation of current practice requires a set of objectives. In the absence of objectives, policy makers may be forced […]

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