Financial Accounting II (2)

Financial AccountingYes, the reasons for the demise of the Committee on Accounting Procedure (CAP) of the AICPA and the Accounting Principles Board can be related to a growing influence by governing bodies, politicalization”, such as the SEC. For example to that statement; a BBA student looking for financial information of GOOGLE, he or she is the external user of the accounting information of GOOGLE. The financial reports or information are the result of accounting process that transferred to the users in two forms-internal and external. Relevance is a key characteristic of information in many spheres; accounting is no exception.

Book keeping generally involves only the collection of business transactions (transactions) and is therefore, just one part of the process of accounting. The basic aim of accounting is to give information to the interested parties to enable them all to make important business decisions. The required information, particularly in the case of external parties, is given in the basic financial statements: Profit and loss statement and the Balance sheet. Accounting information is communicated in the form of reports, statements, graphs and charts to the internal and external users who need it in different decision situations. Budgetary accounting is the preparation of operating accounts in form of budgets.Financial Accounting

Reliable information about economic resources (assets) and obligations (liabilities) of a business enterprise in order to evaluate its strengths and weaknesses, and its financial position in general. Accounting records relate to the transactions that are completed, which provide fairly good account of the transaction of the business organisation. Financial accounting makes provision for financial information but it does not provide non-financial information such as behavioral and socio-economic. The main purpose is stewardship of financial resources received and expended in compliance with legal requirements.

If the objective of accounting reports is to influence the behavior through decision-making then it must provide the data concerning the behavior and outcome of human activity to facilitate performance evaluation. Therefore, the accounting information does not fully meet different types of information-requirements of varied decision making situations. In the past, financial reporting by the Government has largely been seen as inadequate, government ministries/bodies do not provide understandable financial reports. The IPSASB’s Strategic and Operational Plan, 2007-2009 sets out the direction for the board in fulfilling these objectives.

The preparation of transparent and understandable financial statements is an important way for Government departments/other agencies to demonstrate their accountability to citizens who fund them through taxes, as well as development partners. IPSAS are developed by the International Public Sector Accounting Standard Board (IPSASB), which is an arm of the International Federation of Accountants (IFAC); the global organization for the accounting profession founded in 1977. The difference between the two, if significant must be explained by the accounting officer.

Financial Accounting