Tag Archives: Role of Accounting

Even though we follow the Accounting Principle of Conservatisim in our work as Accountants, we’re not all conservative. Watch this video for a bit of a laugh!

Accountants generally approach their work from a common perspective. To enable this, the accounting profession has agreed to a number of generally accepted Accounting principles that govern the accounting information is recorded. These principles include:

• Monetary Unit
• Reporting Period
• Consistency
• Conservatism
• Historical Cost
• Accounting Entity
• Going Concern

To help you remember these seven principles you can use Mr. Chag.

The IASB’s Framework for the Preparation and Presentation of Financial Statements describes the basic concepts by which financial statements are prepared. The Framework serves as a guide to the Board in developing accounting standards and as a guide to resolving accounting issues that are not addressed directly in an International Accounting Standard or International Financial Reporting Standard or Interpretation.

In the absence of a Standard or an Interpretation that specifically applies to a transaction, management must use its judgement in developing and applying an accounting policy that results in information that is relevant and reliable. In making that judgement, IAS 8.11 requires management to consider the definitions, recognition criteria, and measurement concepts for assets, liabilities, income, and expenses in the Framework. This elevation of the importance of the Framework was added in the 2003 revisions to IAS 8.

The Qualitative Characteristics of Financial Statements are outlined in the Framework for the Preparation of Financial Statements.

Visit the International Accounting Standards Board website.

The Australian accounting profession recently adopted the International Accounting Standards (IASs). Financial statements may not be described as complying with IFRSs unless they comply with all of the requirements of each applicable standard and each applicable interpretation.  The IASB Framework for the Preparation and Presentation of Financial Statements serves as a guide to resolving accounting issues that are not addressed directly in a standard. Moreover, in the absence of a standard or an interpretation that specifically applies to a transaction, IAS 8 requires that an entity must use its judgement in developing and applying an accounting policy that results in information that is relevant and reliable. In making that judgement, IAS 8.11 requires management to consider the definitions, recognition criteria and measurement concepts for assets, liabilities, income, and expenses in the Framework.

Click here to view the International Financial Reporting Standards.

 The International Framework for the Preparation and Presentation of Financial Reports sets out some broad concepts that guide the prepartation of accounting reports. These broad concepts are known as Qualitative Characteristics. The Qualitative Characteristics are basic qualities that accounting information should posess. The four qualitative characteristics of accounting reports are:

• Comparability
• Understandability
• Relevance
• Reliability

To help remember these you can use Mr Curr.