The Pros And Cons Of Understandability

In accounting there is much to be learned, about the financial aspects of a business. In the past five weeks I have learned the importance of financial reports and how they relate to the success of an establishment. These reports may include balance sheets and income statements, which help accountants and the public grasp the overall financial condition of a company. The information in these reports is really significant to, managers, owners, employees, and investors. Managers of a business can take and deduce financial

Since the three statements offer three different kinds of information, sometimes it is useful to look at each in the context of the others, and to look at specific items in the larger context. This is the purpose of financial statement analysis: creating comparisons and contexts to gain a better understanding of

The purpose of this paper is to define accounting, and identify the four basic financial statements. The paper also explains how the different financial statements are interrelated to each other and why they are useful to managers, investors, creditors, and employees.

financial statements” (Waxman, 2013, p. xiii). It is the purpose of this paper to discuss some of

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

When organizations present financial statements for review, the information contained in the statements should be appropriate and clear enough as to enable evaluators or auditors of the information to make accurate estimations of the presenting organization’s financial status.

The second section of this report looks at the first recommendation which suggests firms to report different set of accounting information for its different users. Professional investors are very critical of the two approaches put forward as they do not want exclusion on financial information. The third section of the report looks at the second recommendations on how auditors can play a significant role in encouraging firms to omit immaterial disclosures. Profession investor can rely on auditor’s notes on materiality of financial disclosures when making financial judgments however there are still questions on what is thought to be material. The final part of the report

The financial statement summarizing a firm's accounting performance over a period of time is the: income statement.

The purpose of this assignment is to increase your understanding of the information contained in a firm’s financial statements and of the relationship between the statements. As you study financial accounting, we will focus on using financial information in a meaningful way, to understand the firm’s past performance and project its future performance.

The four primary financial statements found in annual reports include the income statement, balance sheet, statement of retained earnings and statement of cash flows. The data in each statement includes results from the most recent fiscal year-end, as well as historic data that stakeholders use in identifying trends from year to year. The financial statements include data required for stakeholders to calculate a variety of ratios and analysis which are critical in determining corporate levels of efficiency, profitability, liquidity, debt and sustainability. Since financial statements of public corporations are audited by independent firms, the financial data is typically accurate and generally reflects a standardized format following Generally Accepted Accounting Principles

Single sets of accounting reports incentivise companies to lower reported profits as high profits attracts higher tax . This leads to conservative accounting values and understatement, lowering comparability and quality of annual reports. Thus, BHP Billiton, Suncor and Statoil’s annual reports provide better quality by separating accounting profit and taxable income

Gregory the information that the financial statement provide gives management more backing when making decisions (Edmonds, Tsay & Olds, 2011). The information presented in an income statement allows companies to gauge their financial performance (Analysis of Small-Business Financial Statements Using Neural Nets, 1995). The company is able to make judgments and changes after comparing financial statements over a period of time.

Financial statements of the company are significant for the investors who would like to venture into the business operation. It gives them the insight whether the business is making profits or it is doomed to fail;

Each user of the financial statements interprets the information in a different manor. They use the information to determine their interactions with the organization. Management, investors, and employees use the same information from the financial statements but for different purposes. These four basic statements are the fundamentals of accounting which can be much more detail and complex. They do not need to be more complex for the users of the information; these basic statements have all the information needed to make

The elements of financial statements are statement of financial performance or income statement, statement of financial position or balance sheet, statement of cash flows, statement of stockholders equity and notes. Statement of financial performance gives information about the financial health or profitability of companies during a particular period of time. For example, the company is profitable if its sales revenue exceeds its business expenses, and users of financial statements such as investors, creditors, banks and government agencies may use the information in the income statement to make economic decision. Moreover, the company is operating unprofitably if its expenses exceed its sales revenue during a particularly