Accounting principles and case studyy

Conceptual framework for financial reporting

Introduction

This has three parts A ,B C dealing with essentiality of conceptual framework for financial reporting , analysis of Next Plc 's annual report and identification of the four characteristics of reporting therein and the most important component of the characteristics from the shareholder 's perspective respectively

Part A

Objectives

A conceptual framework for the reporting is designed by the factors such as objective , quality , standard of construction and capital concept . The first and foremost concept is `objective . The objective behind reporting is

to furnish the users with the required information that will enable them make economic decisions based on the figures and other relevant information submitted . Since accounts only provide historical information , the report must be on accrual basis so as to give an idea of future events also for the users . Besides , the report must presuppose that the entity being reported is a going concern . The second concept which forms the frame work is

the quality of the report meaning it should be useful to the stakeholders . Called qualitative characteristics , they are relevance reliability , comparability and understandability of the data reported The third one is the basis selected for the measurement of elements such as assets , liabilities and equity that need to be mentioned in the report . And the fourth and last concept of the frame work is the capital and the manner in which it has to be maintained (IASC Foundation Education

Further , such a frame work is also necessary for...