(framework for the preparation and presentation of financial statements) Enhancing characteristics of useful information: There are four qualitative characteristics that improve the usefulness of financial information, these characteristics are comparability, verifiability, timeliness, and understandability. Comparability is the qualitative characteristic that allows users to recognize and understand differences and similarities among two pieces of information. Verifiability means different knowledgeable and independent could reach single consensus, although not about the complete agreement, a particular depiction is faithfully represented. Timeliness means information is available on time to related users. Generally, the older the information, the less useful it is.
This ratio considers the current total assets of a company relative to that company’s current total liabilities. Formula: ( Current Assets)/(Current Liability) Quick ratio(Acid-test ratio) The quick ratio is a measure of a company’s immediate short term liquidity. The quick ratio is very similar to the current ratio, but it represents a more stringent test of liquidity in that it excludes inventories. Inventories cannot be converted into cash quickly for many business. Therefore, it may be better to exclude this particular asset from this measure of liquidity.
These standards should require transparent, comparable and high quality information in financial statements and other financial reporting to help the investors & other entrants in the world’s capital markets and also to help other users of financial information to make economic decisions. 2. To promote the use and accurate application of those standards. 3. To take account of, as suitable, the needs of a range of types and sizes of entities in various economic settings.
The study has used secondary sources for the purpose of the study. The primary criteria of this project is to evaluate the financial performance of a company, identifying how the company is actually working and whether the actual performances are in accordance with the standard performance and in case of any deviations the purpose is to find suitable solution to overcome from the deviations. Those different studies has been made by using the consolidated statement of comprehensive income and consolidated statement of financial positions and operating as well as current ratios are also used for the purpose of the
Hence, choosing appropriate options is a way to address these issues. The “expectations gap” is the difference between the expectation of users and the reality towards an audit. Especially, it also comes from the difference between the ability and responsibilities of the auditor to detect financial statement fraud. Using generic language in auditor’s report widens the gap. Higher transparency may help boost communicative value.
FINANCIAL ACCOUNTING Q1. Critically discuss the role, objectives and limitations of published annual financial statements for companies, and discuss the reasons for, and sources of regulation of the content and format of those financial statements Abstract This paper explains the financial accounting process in different business entities. The accounting process requires organizations to provide detailed and accountable statements regarding their firms’ activities. The statements range from income statements, balance sheets and the cash flows statements. The different statements have various roles, goals and limitations pertaining to each one of them.
1.1 INTRODUCTION TO FINANCIAL ANALYSIS Financial analysis converts raw information of financial statements in useful financial information. Only after financial analysis, we can use financial statements for decision making. This financial information is useful for planning, evaluating and making financial decisions. Further, financial analysis helps in assessing the past performance along with the current financial position, in order to make predictions about the future performance of the company. The process of evaluating business, projects, budget and other finance related entities to determine their suitability for investment.
The risk rating system is drawn up in a structured manner, incorporating different factors such as borrower’s specific characteristics, industry specific characteristics etc. Risk rating system is being applied to the loan accounts with total limits above Rs.50 lacs. Bank is undertaking periodic validation exercise of its rating models and also conducting migration The Bank has in place a well defined organizational structure for market risk management functions, which looks into the process of overall management of market risk viz. interest rate risk & foreign exchange risk and implements methodologies for measuring and monitoring the same. Tools like stress testing, duration, modified duration, VaR etc.
Money statements record money data; but, this information should be evaluated through financial analysis to become a lot of helpful to investors, shareholders, managers and alternative interested parties. The objective of financial statement analysis is to provide useful information to the management. Balance Sheet describes the company’s assets and liabilities. Financial Statement analysis helps in following decisions- i. Investing
Accounting operates through basic principles and rules. There is a need to know that the purpose of financial accounting is not primarily to report the value of an enterprise. Rather, its purpose is to provide enough information for others to assess the worth of such enterprise. May, (1943, p.189 asserts; “it is an art, not a science, but an art of wide and varied usefulness”. An art that requires certain skills of implementing techniques and methods of presenting financial findings by following and implementing a universally accepted