Transcript Slide 1
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Conceptual Framework of
Financial Statements
Financial Accounting for Management
CHAPTER OBJECTIVES
Financial Accounting for Management
Introduction
Purpose of the Framework
Assistance to:
Preparers
Auditors
Users of Financial Statements
Accounting Standards Board (ASB)
Scope and Coverage
Components of Financial Statements
Balance Sheet
Statement of Profit and Loss
Cash Flow Statement
Notes to Account and Accounting Policies
Financial Accounting for Management
Researsh in Financial Reporting
Case 1: Research in financial reporting Tata Motors Ltd.
Financial Accounting for Management
Financial Accounting for Management
Objective of Financial Statements
Financial position
Economic resources
Financial structure
Liquidity and solvency
Performance
Cash flows
Users and Their Information Needs
Present and Potential Investors
Employees and their Representative Groups
Lenders
Suppliers and other Trade Creditors
Customers
Governments and their Agencies
Public
Management
Others
Financial Accounting for Management
Case 2 Reliance Industries Ltd.
Annual Report 2005–06
Financial Accounting for Management
Financial Accounting for Management
Assumptions Underlying Preparation of Financial
Statements
Accrual basis
Going concern
Consistency
Qualitative Characteristics of Financial Statements
Understandability
Relevance
Materiality
Financial Accounting for Management
Illustration 1
Financial Accounting for Management
Reliability
Faithful representation
Substance over form
Neutrality
Prudence
Completeness
Comparability
Constraints on qualitative characteristics
Balance between Timeliness and Reliability
Balance between Benefit and Cost
Balance between Qualitative Characteristics
True and fair view
Financial Accounting for Management
Definitions, Characteristics Recognition and
Measurement of the Elements of Financial Statements
Definitions and Characteristics
Financial position
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Performance
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Assets
Liabilities
Equity
Income
Expenses
Cash flows
Recognition
Process of recognition
Specific Issues
Financial Accounting for Management
Measurement
Measurement bases
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Historical cost
Current cost
Realisable value
Present value
Concepts of Capital and Capital Maintenance
Capital
Financial concept
Physical concept
Capital maintenance and determination of profit
Financial capital maintenance
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Illustration 2
Physical capital maintenance
Financial Accounting for Management
Case 3 Infosys Technologies Ltd. (Annual Report 2005–06)
Concluding Remarks
Financial Accounting for Management