Ias - Financial Accounting
- Submitted by: kinghenryviii
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- Category: Other
- Date Submitted: 11/24/2010 06:44 PM
- Pages: 9
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Description
Financial statements are the reports done up at the end of a trading period ranging from monthly, to quarterly to yearly just as long as it coincides with the end of the business’s trading period. There are four main financial statements; they are the statement of income, statement of equity, cash flow statement and the balance sheet, each may be found between appendices 1 - 4. The external users of financial statements include investors and lenders, employees, customers and suppliers, governments, and the public. Although each of these groups has different reasons for using the financial information provided in the statements, there are commonalities in the information that can help to meet those needs. The main objective of financial statements is to provide information about the financial position, performance, and changes in financial position of an entity that is useful to a wide range of users in making economic decisions. There are two key assumptions underlying this objective. First, statements are prepared using the accrual basis; and second, statements are normally prepared on the assumption that the entity is a going concern and will continue in operation for the foreseeable future. The usefulness of information in financial statements depends on meeting the key attributes or qualitative characteristics of consistency, relevance, reliability, and comparability:
• Information needs to be consistent;
• The relevance of financial information relates to its predictive value, as well as its usefulness in helping users confirms their previous predictions or evaluations. Materiality provides a threshold in determining whether information is relevant to users. Based on the size and/or nature of the item, judgment is used to determine if the item would influence the decisions of users.
• Reliability involves providing information that represents transactions or events faithfully, in accordance with their...
Description
Financial statements are the reports done up at the end of a trading period ranging from monthly, to quarterly to yearly just as long as it coincides with the end of the business’s trading period. There are four main financial statements; they are the statement of income, statement of equity, cash flow statement and the balance sheet, each may be found between appendices 1 - 4. The external users of financial statements include investors and lenders, employees, customers and suppliers, governments, and the public. Although each of these groups has different reasons for using the financial information provided in the statements, there are commonalities in the information that can help to meet those needs. The main objective of financial statements is to provide information about the financial position, performance, and changes in financial position of an entity that is useful to a wide range of users in making economic decisions. There are two key assumptions underlying this objective. First, statements are prepared using the accrual basis; and second, statements are normally prepared on the assumption that the entity is a going concern and will continue in operation for the foreseeable future. The usefulness of information in financial statements depends on meeting the key attributes or qualitative characteristics of consistency, relevance, reliability, and comparability:
• Information needs to be consistent;
• The relevance of financial information relates to its predictive value, as well as its usefulness in helping users confirms their previous predictions or evaluations. Materiality provides a threshold in determining whether information is relevant to users. Based on the size and/or nature of the item, judgment is used to determine if the item would influence the decisions of users.
• Reliability involves providing information that represents transactions or events faithfully, in accordance with their...