accounting Essay

315 WordsMay 17, 20082 Pages
Defintation of Reporting Entity The significance of an Australian company needed to prepare fincacial reports was determined by the application of the reporting entity concept. Definition of the reporting entity requires reporting entities to prepare general purpose financial report designed to satisfy the common information needs to a wide range of users who are unable to command the pepartion of reports tailored to there particular information needs. SAC 1 also defines reporting entities as those ‘in respect of which it is reasonable to expect the existence of users dependent on general purpose financial reports for information which will be useful to them for making and evaluating decisions about the allocation of scarce resources’ this general purpose accounting statements should be prepared in accordance with Staements of Accounting Concepts and Accounting Standards. This helps the investors to assume the firm is staying in business in the foreseeable future, it also affects how assets are valued and revenue when it is earned. The statements should made with accuracy, validity and verifiability which allows the users to evaluate of similarities and differences and provide sufficient explanation which will affect users decision making. The qualitative characteristics will provide assistance when choices have to be made between reporting policies - whether by preparers, auditors, those participating in the standard-setting process, regulators or others - and be indicative of the qualities that users can expect of the financial information provided to them. The reliability of these statements will help users make accurate prediction about present or future events. The statements are made in way to comply with the understanding of the user of that information and be able to comprehend its meaning. The information in the statement should be reliable by the users

More about accounting Essay

Open Document