Conrad Appointed To Financial Accounting Standards Advisory Council (2)

Financial AccountingAccounting is an information system that identifies records and communicates the economic events of an organization to the interested users in form of financial statements. If the management knows accounting, or at least, keeps in mind that any decisions it makes may have an accounting impact, the management may run some accounting numbers or even consult their accountants (and sometimes, even the external auditors) before going through the transaction. So, have pity on your accountants (and yourselves) and try to look at the accounting side of your decisions first before implementing them. There are some disadvantages, mainly you will have to spend more of your time learning and understanding accounting (which is not really that easy).

Very good hub and I agree with you that a business owner should at least understand the basics of accounting. That is one of the very first things I tell people who are contemplating self employment: understand the basis of accounting and taxes. It states that methods used in one accounting period should be the same as those used for materially similar events and transactions in other accounting periods.Financial Accounting

Some of them do make the effort but without a solid accounting background, they often get lost in translation and I have to describe what I’m saying in laymen’s terms before they can fully understand accounting. However, this is not always feasible in financial accounting, since entities may not follow the consistency concept once there is justification for doing so. Consistency of presentation is related to certain qualitative characteristics of financial statements – reliability and comparability.

The need for this fundamental principle arises because in financial accounting, there can be several routes to one result. In summary, the consistency concept facilitates comparability, reliability and fair presentation of financial statements. In order to function effectively, these different arenas need to communicate and it is accounting information that facilitates this communication.

According to Kyriacou (2007, Lecture 1, p5) accounting information serves many important purposes, for example assisting users in making informed decisions, in relation to the effective allocation of scarce resources. Therefore accounting information can be seen to be a potent influence in society, which affects everybody. In doing so I will be exploring, in particular the development of the conceptual framework, the contributions made by modern accounting theorist and the developments in accounting concepts.

Financial Accounting