This report briefs the user about the objectives, characteristics, financial statement elements and measurement of financial statement elements. In this report AASB/IASB conceptual framework has been concerned to perform this study.
AASB/IASB is an accounting board which briefs the professionals about the preparation of financial statement and also depict that how must the financial statement must be presented.
The above map depict about the objectives, characteristics, financial statement elements and measurement of financial statement elements. In this report, objectives of general purpose financial reporting, qualitative characteristics of financial information, elements of financial statements and recognition and measurement of financial statement elements have been studied. While conducting this research, IASB and AASB framework has been considered.
Objective of general purpose financial reporting:
General purpose financial reporting has come into consideration to provide financial reporting and presentation standards to the professionals as the professionals were using their own standards and knowledge to prepare and present the final financial statement. More, the objective of this is to make decisions about the financial statement in a better manner by the internal and external stakeholder of the company. More, it becomes easy to the stakeholder to collect the information (Kothari, Ramanna & Skinner, 2010). Thus it could be said that the main objective of the company is to offer financial information in a good manner to the stakeholders.
Qualitative characteristics of financial information:
This concept of IASB and FASB depict about the Relevance of the financial statement, Materiality concept which depict that irrelevant information must not be shown in the final statements, faithful representation depict that the statements must be faithful and relevant for the stakeholders, comparability describe about the competence of the final statements, verifiability depict that the statements must be verified and must offer the true knowledge and information about the company (Schrand & Zechman, 2012).
Elements of financial statements:
Financial statements are essential for every public limited company to manage to offer a true, faithful and relevant information to the stakeholders. Assets, Liabilities, Equity, Income, Performance, Expenses, Capital maintenance adjustments etc are the main elements of the company which must be described and presented into the final statements of the company. It depict about the true information of the company and a better decision could be made by the internal and external stakeholders through it (Bohusova & Nerudova, 2009).
Recognition and measurement of financial statement elements:
It is required by the company to recognize and measure the following elements and concept of the company to make a better final financial statement so that the true information of the company get by the internal and external stakeholders and a better decision could be made by the internal and external stakeholders through it (Deegan, 2012). Probability of future economic benefits must be measured in a proper manner, measurements must be reliable, assets must be recognized in a proper manner, liabilities must be recognized in a proper manner, income must be recognized in a proper manner, expenses must be recognized in a proper manner, historical cost measurement must be done in a proper manner etc.
Thus through this study, it could be concluded that the statements must be prepared in such a manner that a better decision could be made by the stakeholders of the company
Bohusova, H., & Nerudova, D. (2009). US GAAP and IFRS convergence in the area of revenue recognition. Economics and Management, (14), 12-19.
Deegan, C. (2012). Australian financial accounting. McGraw-Hill Education Australia.
Kothari, S. P., Ramanna, K., & Skinner, D. J. (2010). Implications for GAAP from an analysis of positive research in accounting. Journal of Accounting and Economics, 50(2), 246-286.
Schrand, C. M., & Zechman, S. L. (2012). Executive overconfidence and the slippery slope to financial misreporting. Journal of Accounting and Economics, 53(1), 311-329