Understand Financial Accounting

TASK

Assessment Task Part A

IFRS framework notes that other parties, covering prudential and market regulators, which might search common aim financial reports useful. Although, these does not consider main user and common aim financial reports are not basically instructed to regulators or other parties.

IFRS framework elaborates basic concepts which underline forming and presentation of financial statements for external users. IFRS framework serves as a guide to the Board in the emerging future IFRSs and to resolve accounting issues which does not addressed instantly in an IFRS or IAS.

The IFRS framework helps to identify objective of financial reporting, qualitative functions of useful financial information, reporting entity, identification, recognition, and measurement of components from which financial statements are made, concept of capital and capital maintenance.

However, this can be rightly said that the general aim financial statements issued by the organisation enterprises started in the earnest once the “decision usefulness” world view entered the literature, initially in the United States in 1950s. Objectives of ‘Financial Accounting and Financial Statements’ said that ‘basic aim of financial accounting and financial statements is to render conceptual basis for future pronouncements, as this had peremptorily rejected ‘redical’ recommendations.

Objectives of Financial Accounting and Financial Statements’ stated that “basic aim of financial accounting and financial statements is to render quantitative financial information about firm which is helpful to statement users, specifically owners and creditors, in forming economic decisions. Statement rightly stated that the shareholders and actual creditors, not prospective creditors. This is proceeded to enumerate and elaborates five “general objectives” about what kinds of financial information organisation must render (Jarolim, and Öppinger, 2012).

The main aim of the International Financial Reporting Standard is to provide appropriate information to the investors for making comparisons between organisations in international capital markets. Which is the best tool to let the them know about the firmness of the organisation. There are so many tools that can be used by the organisation for making business objectives sustainable and reliable by using IFRS. As this helps out to satisfy the financial reports in order to satisfy central objectives of financial reporting as determined in the Conceptual Framework.

Assessment Task Part B

Corporate Social Responsibilities reflects not only a landscape of theories but likewise a proliferation of approaches that are complicated. In practical manner, CSR theory reflects four dimensions which are connected to earning, political performance, social demands and ethical values.

Public Interest Theory: This theory regulates in order to protect and benefits at large. This simply means that an economic concept which are strongly connected to welfare economics which renders theoretical justifications for regulation. This theory notes that markets functions by specific features such as imperfect contenders, asymmetric information, externalities, etc which are not capable and experience market failure, that could be corrected along with use of regulation. Theory is totally relied upon the main assumptions about nature of regulators: have whole information, could guarantee perfect enforcement, and are benevolent (Rich, Jones, Mowen and Hansen, 2012). Regulators are motivated by societal interests and join in the market for improving social outcomes. As per this theory, the regulatory bodies contribute for the promotion of the public interest. Public interest could further be elaborated as the best possible allocation of scarce resources for individual and group products and services in the surrounding areas in the society.

In the western countries, allocation of the scarce resources is to crucial extent coordinated by the market mechanism. In this theory, this can be demonstrated that, as per the specific situation, allocation of resources by way of market mechanism is optimal. As, these situations do frequently not implement practically, allocation of resources is not maximum from a theoretical perspective and quest for tools of enhancing resource allocation emerges. This situation is elaborated as the market failure. As this can be rightly said that the market failure is a kind of situation where limited resources are not put to them at the greatest value uses (Malíková and Brabec, 2012). During a market setting, these values are demonstrated in prices of products and services. Henceforth, market failure applied a discrepancy between price or value of an extra unit of a specific product or service and its marginal cost. Ideally, in a market, production by an organisation must expand till the situation emerges where marginal resources costs of an extra unit of a specific product or service. Similarities of prices and marginal costs functionalised an equilibrium in a contended market. If costs are lower than the provided price market price, an organisation would earn profits from an additional unit of manufacturing. If costs are more than the price, an organisation would be cutting manufacturing unit price again than the provided price.

Henceforth, this can be rightly said that government instead of making a separate act, must have to introduce provision in existing corporation Act which will help out to make certain objectives in an effective manner (McCarthy, Shelmon and Mattie, 2012).

Capture theory: This is the theory under which the regulations are manipulated in order to set the needs of those influenced by them. theory suggests that over a provided period of time regulations serve interests of the industries related. This theory was made by the political scientists. The main benefits of key intentions of framing regulations. Individuals to be influenced by the regulations which are directly involved in making of these regulations. Henceforth, there is an appropriate representation of the politicians and interest groups as regulations of the politicians and other interest groups since regulations are drawn for requirements. This theory clearly does not render a crucial difference from public interest theory. This theory does not render a crucial different from public internship theory (Bhattacharyya, 2012). This theory elaborates that the public interest is the starting of the regulations. This does not clearly elaborate how an industry could subject an agency to its interests but can’t resist its incorporations.

Economic interest theory: This theory suggests that regulations are fixed of policies which are emerged by forces of supply and demand. Government is placed on the supply side at the interest groups on demand side. This theory totally fixes that the regulation is emerged by the sector and objective of regulations is to form advantages to the industry concerned. This theory suggests that this is the industry which emerges regulations to be considered in the market. This industry fixes the regulations for advantages of its members. this likewise operates these regulations and nothing outer mechanisms are covered. Government enables stakeholders in sector to participate in the decision making relating to the economic matters which influence the industry of the economy.

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