Users of Financial Instruments and Information

821 Words2 Pages
bulb-icon

Recommended: Historical development of accounting standards

Financial Instruments is an important topic in accounting and it a controversial topic in many areas. People in the world investor, lender, companies and anyone who uses financial information need reliable and relevant information to make decisions and financial instruments influence significant in their decision especially after financial crises. Financial instruments define as "any contract that gives rise to a financial asset of one entity and a financial liabilities or equity instruments of another entity". International Accounting Standard Board (IASB) played an important role in development standards for financial instruments for many years. In 2003 the IASB issued two standard relating to the financial instruments, First one is IAS32 this standard explains financial assets and financial liabilities, it explains the differences between financial liabilities and equity instruments, and it put set of disclosure requirements simply it explain presentation and disclosure of financial instrument. Second one is IAS39 this standard requires all financial instruments to be recorded at fair value and from here a lot of people blamed fair value method for financial crisis also it explain measurement and recognition issues. AISB believes that users of financial instruments need information about entity performance, financial position for entity and risks arising from financial instruments so IASB conclude that it must do improvement for disclosure in IAS32 and it did. In 2005 It issued IFRS7 it applies risks arising from financial instrument and enhance disclosure requirement also it requires quantitative and qualitative information for users. As the economy globalized and financial becomes very complex the IASB issued IFRS9 in 2009,... ... middle of paper ... ...ty instrument. 4. Equity Instrument: any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. 5. Derivatives: A financial instrument that derives its value from another underlying item, such as a share price or interest rate and its value must change in response to a change in underlying item and it must require no initial investment and settled at a future date. 6. Measurement: The process of determining the monetary amount at which an asset, liability, income or expense is reported in the financial instrument. 7. Recognition: The process of incorporating in the financial statements an item that meets the definition of asset, liability. Income and expense. 8. Derecognition: The process of removed financial assets or financial liability from financial statement when and only when, they are extinguished.

Show More
Related

  • Comparing Costco And Sam's Club

    302 Words  | 1 Pages

    Financial Accounting is ‘Asset valuation, accounting record completeness and accuracy, accounting estimates, reporting transparency, fair value accounting issues, convergence of accounting standards, evolution of accounting standards, audit efficiency and effectiveness’, as suggested by Accounting Dictionary (2014).

    Read More

  • Bausch + Lomb's Unethical Practices and the FASB Codifications

    1401 Words  | 3 Pages

    Plunkett, Linda M., and Robert W. Rouse. "Revenue Recognition and the Bausch and Lomb Case." CPA Journal Sept. 1998: n. pag. CPA Journal. Web. 16 May 2014.

    Read More

  • Why Was Codification Needed?

    1008 Words  | 3 Pages

    The goal of the Codification is to simplify the organization of thousands of authoritative U.S. accounting pronouncements issued by multiple standard-setters. To achieve this goal, the FASB initiated a project to integrate and topically organize all relevant accounting pronouncements issued by the U.S. standard-setters including those of the FASB, the American Institute of Certified Public Accountants (AICPA), and the Emerging Issues Task Force (EITF)

    Read More

  • Ethics In Accounting: AICPA And IMA Ethical Standards

    816 Words  | 2 Pages

    Now more than ever it is important to know what IFRS is and what AICPA and IMA are, especially pertaining to their ethical standards. IFRS or the International Accounting Standards Board is a group of highly experienced professionals in the accounting field. They deal with the setting of standards, as well as preparing, auditing or using financial reports, and educating future accountants. The AICPA or the American Institute Of Certified Public Accountants is a non-profit organization of American Certified Public Accountants (CPA) who create

    Read More

  • A Critical Component Of Any Accounting Theory Course

    1218 Words  | 3 Pages

    According to the conceptual framework, the potential users of financial statements are investors, creditors, suppliers, employees, customers, governments and agencies, and the general public (Financial Accounting Standards Board, 2006). The primary users are investors, creditors, and those who advise them. It goes on to define the criteria that make up each potential user, as well as, the limitations of financial reporting. The FASB explicitly states that financial reporting is “but one source of information needed by those who make investment, credit, and similar resource allocation decisions. Users also need to consider pertinent information from other sources, and be aware of the characteristics and limitations of the information in them” (Financial Accounting Standards Board, 2006). With this in mind, it is still particularly difficult to determine whom the financials should be catered towards and what level of prudence is necessary for quality judgment.

    Read More

  • The Differences Between the GAAP and the IFRS Accounting Systems

    1089 Words  | 3 Pages

    What is IFRS, and what is its significance in the world market? In 2001 the International Accounting Standards Board, or IASB, was created to develop a set of standards by which global financial statuses could be reported. According to financialstabilityboard.org, this set of standards, known as the International Financial Reporting Standards, or IFRS, falls under the jurisdiction of the IFRS Foundation, which is a non-profit, private and independently run entity that exists for the public interest, is based on four principle objectives. The first is to develop a single set of international financial reporting standards (IFRS). This set would be high in quality, readily understandable, easily enforceable, and acceptable world-wide. The second objective is to encourage the use of this set of standards in the international business world. Thirdly, the ISAB would like to monitor the needs of different sizes and types of businesses in different settings. The fourth objective is to promote the adoption of the IFRS by converging national accounting standards wit...

    Read More

  • Comparing Debt Financing and Equity Financing

    1367 Words  | 3 Pages

    There are two basic ways of financing for a business: Debt financing and equity financing. Debt financing is defined as 'borrowing money that is to be repaid over a period of time, usually with interest" (Financing Basics, 1). The lender does not gain any ownership in the business that is borrowing. Equity financing is described as "an exchange of money for a share of business ownership" (Financing Basics, 1). This form of financing allows the business to obtain funds without having to repay a specific amount of money at any particular time. There are also a few different instruments that could be defined as either debt or equity. One such instrument is stock options that an employee can exercise after so many years with the company. Either using the debt or equity method, or a combination of the two methods can be used to account for stock options or other instruments with the similar characteristics.

    Read More

  • La Vitesse, Une Erreur?

    722 Words  | 2 Pages

    «La principale erreur de notre temps est de chercher en toute chose la vitesse. »

    Read More

  • Financial Instruments Case Study

    1380 Words  | 3 Pages

    Overall derivative financial instruments are valued by the relationship to interest rates and different financial values at the time. The different types of derivative financial instruments have their advantages and disadvantages attached.

    Read More

  • Essay On Positive Accounting Theory

    3052 Words  | 7 Pages

    AASB, Australian Accounting Standards Board, Statement of Accounting Concepts SAC4 ‘Definition and recognition of the elements of financial stat

    Read More

  • Accounting and Finance

    1550 Words  | 4 Pages

    Both accounting and finance deal with money and assets; however, they are categorically different concepts. This portion of the essay will discuss the dissimilarities between accounting and finance. Examples of different concepts will be given for both practices.

    Read More

  • International Financial Reporting Standards

    1068 Words  | 3 Pages

    The globalization of business has resulted in the need for compatible accounting standards that can be used internationally for financial reporting. As a result, the International Financial Reporting Standards (IFRS) were developed by the International Accounting Standards Board (IASB) to unify the various financial reporting methods and create a single accounting standard which can be applied to any financial statement worldwide (Byatt). The global standardization of financial reporting will increase the readability and enhance comparability of globally traded companies’ financial statements, without the need of conversion or translation. There are a few main differences between the International Financial Reporting Standards (IFRS) and the U.S. Generally Accepted Accounting Principles (U.S GAAP). The increasing recognition and acceptance of the International Financial Reporting Standards by accounting professionals in the United States, will affect the way in which the U.S will record financial statements in the future.

    Read More

  • The Importance Of Accounting Standards In Accounting

    1327 Words  | 3 Pages

    What is it exactly that makes a business thrive? Is it the popular line of production being sold? The quality of customer service? The manner in which the industry is organized? Indeed, these attentions have a significant role in a corporation, but most importantly just how well is a company running. Hence, the financial statements are the key element in any business. This provides information to shareholders, investors, and more especially to its managers, because these individuals are the ones to understand and communicate the performance of the company. Investopedia comments that “accounting standards are crucial in an efficient market, as information must be transparent, credible, and understandable.” Therefore, the FASB (Financial Accounting Standards Board) has a mission to improve accounting practices in a corporation by enhancing guidelines for accounting reports, to distinguish and solve issues in a suitable manner, and create a fair standard across the financial markets that all those who are busineess affiliated, must pertain.

    Read More

  • Cash Management

    1080 Words  | 3 Pages

    Maintaining a company’s financial assets is a daunting task. Cash management techniques and short-term financing provide accounting executives with the tools needed to survive the constant changes within the economy. The combination of these tools and the knowledge of the world economy will assist companies in maintaining current assets and facilitates growth.

    Read More

  • Importance Of International Financial Reporting Standards

    994 Words  | 2 Pages

    International Financial Reporting Standards (IFRS) is a set of accounting standards, rules, and principles established by an autonomous, non-profit organization called the International Accounting Standards Board (IASB). IFRS are standards issued to offer a common universal language for business activities, so accounts of the organization become comprehensible and comparable throughout international boundaries. These standards are essential for organizations that are dealings in numerous international locations. They are gradually being substituted for many different national accounting standards. These standards are the outcome or the result of the globalization of business and trade.

    Read More

More about Users of Financial Instruments and Information

Open Document