The Understandability of Financial Statements - Assignment Example

The ethical issues include false accounting practices and fraudulent acts of misinterpretation of financial statements.... The ethical issues which were involved in this case were regarding false accounting and fraudulent activity of misinterpretation of the financial statements which can be related to the process of managerial accounting.... Consequently, the former trader was arrested due to the conduct of unethical practices in terms of false accounting and fraudulent activity of misinterpretation of the financial statements (Shirbon, 2012)....

The IASB's framework for preparation and presentation of financial statements require financial statements to be prepared on the basis that they comply with certain accounting concepts, underlying assumptions and (qualitative) characteristics.... he framework for the preparation and presentation of financial statements is ultimately used for corporate reporting.... he International Accounting Standard Board, a privately owned body based in London presented a document in July 1989 which became framework for the preparation & presentation of financial statements....

In addition, a segment of… his part will describes the alternative methods by which assets and liabilities could be measured, and critically assesses the performance of each method against the Qualitative Characteristics of financial information described in the ASB's Statement of Principles (the The use of Fair value of in the UK's Financial Reporting Standards appears to take the position of the US Academics which is conservative in character.... Describes the alternative methods by which assets and liabilities could be measured, and critically assesses the performance of each method against the Qualitative Characteristics of financial information described in the ASB's Statement of Principles (the Conceptual Framework)....

ased on relevance, the information presented in the financial statements is relevant as it is presented in two years, 2007 and 2008.... ased on reliability, financial statements of British Airways have to be audited under IASB and should comply with the requirements in the financial market audit.... It is presented in income statements, balance sheets, and cash flows.... The study "Conceptual Framework of Investment Analysis" evaluates the conceptual framework for financial reporting adopted by the International Accounting Standards Board in April 2001 to provide standard guidelines of value measurements and impairments in financial statement reports....

In response to the existence of different accounting practices, the International Accounting Standard has The key issues in this essay are diverse users of financial statements and the legal, regulatory; their needs have influences on financial statements, the implication of the regulations for the users, the role of the accounting and reporting standards, and ways through which different needs of various groups of users contrast.... The planning and publication of the financial statements is in response to prevailing demand of various users of such financial statement....

 These qualitative characteristics are identified in the IASB's Framework for the preparation and presentation of financial statements as the characteristics of understandability, relevance, reliability, and comparability.... Understandability of information provided in the financial statements implies that presentation of information meets the needs of users of financial statements by exercising reasonable knowledge of business, economic, and accounting activities....

This literature review "The Importance of financial statements" critically examines the importance of financial statements and its utility to general user groups.... A clear explanation of financial statements is given, followed by a discussion on the importance of financial statements.... he primary objective of this paper is to critically examine the importance of financial statements and their utility to general user groups....

Thus, e quality of financial reporting is determined in relation to usefulness of the financial information t necessary for making credit, investment, and similar decisions (Jonas and Blanchet, 2000).... eest, Braam, Boelens (2009) have summarized the needs of both categories that were previously combined by Jonas and Blanchet (2000) and designed a framework which allowed users of financial information to assess the quality of company's reporting.... he first characteristic of the quality of financial reporting that needs to be assessed is relevance of the information presented in financial reporting....