INTERMEDIATE FINANCIAL ACCOUNTING

INTERMEDIATE FINANCIAL ACCOUNTING

The main objective of general purpose financial reporting is to provide financial information about the reporting entity that is useful to present and potential equity investors , lenders , creditors etc for enabling them to make deciscions in their capacity as providers of capital . The funadmental qualitative characterstics of reporting is relevance and faithful representation . Other than this there are four enhancing qualitative characterstics , they are comparibility verifiability , properness and understandability . In the meantime the two invasive constraints that restrict the information provided by financial reporting are materiality and

cost . While mounting the standards , the qualititative characteristics will be considered , so that the information reported will be useful for the so called providers of capital (Frequently Asked Questions . IASB

General purpose financial reporting is not an end in itself , but is a way of conversing pertinent and dependable information about a reporting body to user . Good reporting helps in the competent allotment limited resources , provides method to enable managements and governing bodies to release their accountability , measuring the performance of an entity in financial as well as non financial terms etc . General purpose financial reports shall reveal information pertinent to the appraisal of performance , financial position and financing and investing , including information about observance (Objective of General Purpose Financial Reporting .n .d

The conceptual framework for financial reporting , institutes the ideas that lie behind financial reporting . The structure is a rational scheme of thoughts that stream from a purpose . The objective of financial reporting is the basis of the framework . The preceding perceptions offer supervision of the boundaries of financial reporting , choosing on the transactions , previous events and conditions to be signified , how they should be documented , and how they should be summarised and discussed in the fiscal reports

Conceptual framework institutes the idea of general purpose financial reporting by businesses . Here the idea of financial reporting is the basis of the framework . Other features of the framework together with qualitative characteristics , elements of financial statements definition of a reporting entity , recognition , measurement and presentation , disclosure etc flow logically from the idea

The international accounting standard board 's directive is to help in effectual performance of economies and the well-organized allotment of capital in capital markets by budding high superiority financial reporting standards . This objective is related to financial reporting and is not merely confined to financial statements . The general purpose of financial reporting is directed to the requirements of a broad range of users rather than only to a single group . The information given by general purpose financial reporting centres on the requirements of all capital suppliers and is not confined to a group . According to the new conceptual framework , financial reporting should provide information about the economic resources of an entity as well as the claims on those resources . Financial reporting should also provide information concerning the effects of dealings and erstwhile proceedings and conditions that change entities financial resources and the claim on those possessions . This information is very much constructive to the providers of capital...