The Objectives Of Financial Reporting

SFAC No. 8 addresses the cost constraint on useful financial reporting, “Cost is a pervasive constraint that standard setters, as well as providers and users of financial information, should keep in mind when considering the benefits of a financial reporting requirement.” (SFAC No. 8 BC 3.47) However, the ability to place a dollar value and fully enumerate a cost or benefit is almost an impossible task for standard-setters. Additionally, there is no way to successfully identify and measure all of the economic consequences associated with a new standard. The FASB should be applauded though for advancing uniformity in accounting standards, however; uniform financial reporting suggests a one size fits all approach. “Smaller, non-publicly listed firms (and their auditors) argue that accounting standards are formulated mainly for larger, publicly traded firms” and that “compliance costs are disproportionately higher and the

As stated in the AASB Framework, financial statements play an utmost important role to a variety of users, which mainly consist of the investors, employees, lenders, suppliers and other trade creditors, customers, governments and their agencies, as well as the public, in making vital financial decisions. For accounting information to be ‘decision useful' to this groups of people, the financial information

As the business environment grows and companies find new ways to expand into their respective - or even new – markets, it is important that reporting standards stay up to date with changes and continue to assist companies in providing their users with useful accounting information. Information is labelled as being useful when it meets the

This report is written as a response to the monograph in which the ICAEW published on how financial accounting disclosures can be improved. The aim of this report is to critically discuss and evaluate the worthwhileness of the recommendations made from a financial investor’s perspective. It is done by reviewing recommendations put forward by the ICAEW and analysing if each of the disclosure recommended is worth the effort while putting in perspective what effects these recommendations have on professional investors who are one of the primary users and consumers of financial statements. The report contains information mainly from the ICAEW report and the CFA institute report

This standard outlines the presentation of financial statements for general purpose financial statements, in order to ensure that there is compariablity between the entities reporting periods as well as between other industries reports. The standard discusses the minimum requirement for reporting content and guidelines for the structure in which it is to be set at. Paragraph 117-124 distiguishes the disclosure of accounting policies in relation to judgement. Management’s judgement made in applying accounting policies that may have effected significant amounts found in financial statements and the financial position. Seen in paragraph 125-133 ‘Sources Of Estimation Uncertainty’, it is vital that entities disclose the key assumptions made regarding future prospects and other uncertain estimates that are used in identifying carrying amounts of assets and liabilities. Along side this, the nature and carrying amount must be disclosed at the reporting date.

Another critical requirement for users of financial statements is information, this is addressed through the disclosure of certain principles, policies and procedures to facilitate decision making, which current standards don’t adequately address, hence the issuing of AASB 15. (AASB,2014) Accordingly, a new standard is required to rectify the inconsistencies of revenue recognition and address the lack of consistent and useful information.

IASB. 2010, "The Conceptual Framework for Financial Reporting" IFRS, pp. A21- A38, viewed 23 April 2014,

2. Which of the following is not an objective of financial reporting described in FASB Concepts Statement No. 1? 
a. To provide information about how management of an enterprise has discharged its stewardship responsibility to owners.
B. To measure the current market value of the business enterprise.
c. To provide information so potential investors or creditors can make their own predictions of future

Direct costs for the Ruger Clinic of Toledo, Ohio totaled $100,000 in 2007 and represents the total cost pool. The Ruger's uses direct cost allocation of expenses in the cost pool to three revenue-producing patient services. Drivers under consideration for the allocation of costs are patient service revenue (a direct dollar for dollar allocation) and hours of housekeeping services used (a volume-based activity for allocation). Drivers amounted to the following activity in dollars and volume, respectively:

In this paper we will discuss Walmart’s Balance sheet and Income Statement. We will analyze the company’s total assets at the end of the most recent annual reporting year and to why it is important. We then will talk about the company’s total assets, how much cash and cash equivalents did the company have, as well as, the amount of accounts payable at the most recent year, and from the previous year. What the company’s net revenues are from the last three annual reporting periods, the change in dollars in the company’s net income from the most recent annual reporting period to the previous annual reporting period. We will

Financial accounting is a subjective area that strives to provide complete and accurate information for the end user. Before the class discussion, I felt accounting was more of a science than an art – if you tested items and they fell into a certain parameter, it was an accurate representation of the facts and figures under review. The class discussion and another person’s experience has caused me to rethink this perspective because when one considers the variables incorporated into financial accounting, it is not as simple and clear cut as some would like to think. Hines (1988, p. 252-253) states “having the full picture – a true, a fair view of something – depends on people deciding that they have the full picture. Sometimes, they later decide they did not have the

The FASB has identified qualitative characteristics of accounting information that differentiates valuable information from insignificant information for the decision making process. Decision Makers use a variety of information whether it is given, or knowledge based, however, for this information to be useful the decision maker must understand the quality of the information that they possess. There are four qualities that makes accounting information useful in decision making; relevance, reliability, comparability, and consistency (pg.12, Kieso, Weygandt, & Warfield, 2007) .

Accounting Information is the pearl of any organization. It is how a business provides its investors as well as other stakeholder parties’ direction towards a healthy economic decision in favor of the business. Regulation of these information and standardizing the process would lead to that organization solving the problem of ‘information asymmetry’. (Watts & Zimmerman, 1978)

This paper explores the question whether the financial statements can be made more useful. This leads to an important concept in accounting-- the concept of decision usefulness. To properly understand this concept, this paper outlines other theories from economics and finance to assist in conceptualizing the meaning of useful financial statement information.

Accounting provides relevant and reliable financial information of a company, which in turn can help investors and creditors with the capital allocation process and attract investment capital.