Essay on Financial Accounting

WEEK 3 WORKSHOP EXERCISES (for submission at start of Week 3 Workshop)

Question 1 (Review question 13- page 38 of textbook)
Provide justification as to why large companies should have to produce financial statements that comply with accounting standards but small companies should not have to do this.
A company is defined as large if it exceeds two of the following:
a. Total income of $2.0 million
b. Total assests of $10.0 million
c. 50 employess
Large for profit public sector entities will be in Tier 1 (initial accounting standards framework tier structure). Large companies should produce a financial statement tha comply with accounting standards if they have expenses recognised in the profit or loss section of the statement of profit or loss and other comprehensive income greater than $30 million. Large for profit public sector entities that are not publicaly accountable are also required to report in accordance with Tier 1 requirements.
Whereas small entities that are not accountable or for profit public sector entities that are not large may elect to be in tier 2 which permits entities to report in accordance with a less onerous set of accounting standards if they consider this to result in a better matching of the cost and benefits of their reporting

Question 2 (Review question 1 page 69 of textbook)
What is a general purpose financial statement?
General purpose of financial statement signifies that financial statement should comply with accounting standards and other generally accepted accounting principles and are released by reporting entities with the aim of satisfying the information demands of a varied cross-section of users.

Question 3 (Review question 5 page 69 of textbook)
What is the objective of having a conceptual framework?
Conceptual framework seeks to indentify the objective of general purpose financial reporting, the qualitative characteristic that financial information should possess, the definition, recognition and measurement of the elements of a set of financial statements and concepts of capital and capital maintenance.

Question 4 (Review question 11 page 162 of textbook)
How are current assets

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financial accounting Essay