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Essay example - Finance and Accounting
Finance & Accounting
Pages 6 (1506 words)
Accounting entails the preparation of financial reports. The research delves on the companies’ compliance with International Financial Reporting Standards. The research delves on cosmetic accounting…
Extract of sample
The companies’ compliance with IFRS standards can effectively help predict the future financial outcomes and reduce irresponsible cosmetic accounting practices. The company’s compliance with all International Financial Reporting Standards will translate to better prediction of forecasting future business outcomes. For example, the compliance with standards requires that the company present the historical sales amount s for the past two years. If the sales for 2010 is $ 250,000 and sales for 2011 is $295,000. Any keen financial statement analyst or reader can easily forecast next year’s forecasted sales will exceed $300,000, all other factors being equal (Wiley 14). Further, relevant and valid financial information (balance sheet, income statement, and statement of cash flows) must be relevant to the needs of the financial statement users. To relevant, the financial statements must comply with the predictive value tenets of the International Financial Reporting Standards. Consequently, the financial statement users can increase the reliability of the decision makers (Epstein 13). The International Financial Reporting Standards required that the financial statement should be prepared to enhance the decision making process (Jermkowcz 29). For example, International Financial Reporting Standards require the entities to report long term loans under the liabilities section of the financial reports. ...
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