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留学生金融学与会计财务报表撰写需求由留学作业网提供，留学生作业网专业指导金融与会计相关课程作业，财务报表等essay，assignment指导服务。NAPIER 1 BASICS OF FINANCIAL DEPORTING
3 the change in what they have got
4 what they may get in the future.
You may have done quite a lor of 'accounting' already. In many cases, this willhave consisted largely ol technical manipulation - writing up ledger accounts, preparingprofit and loss accounts and balance sheets and so on. Much of the emphasis
is likely to have been on 'doing things with numbers'. Given a figure to srart with,you can probably record it in a proper double-entry manner and see its effectthrough onto a balance sheet that actually balances.
But this is only part of the story. Suppose you are not 'given a figure1. Supposeyou are given, or have available, a whole variety of figures all related to a particularitem or transaction. Which figure or figures should you actually put into the doubleentrysystem? More fundamentally, how are you going to decide which ones to putin? In very general terms, we can answer this question by going back to our originalsimple definition of accounting. Namely, that it concerns the provision of figures topeople about their resources. Presumably, therefore, the figures that we as accountantsshould provide to people are the figures that they need to know for their ownparticular purpose.
So the key question is: What do people want to know about their resources? Whatuse do they wish to make of the figures we as accountants provide? Once we haveanswered this question, we can go on to say that the figure we should put into ourdouble-entry system is the one l i k e l y to be most useful to the user of our accountingreports.
Accounting therefore needs:
• an effective and efficient data handling and recording system« the a b i l i t y to use that system to provide something useful to somebody.
This book is essentially concerned with the second of these needs. We have to considerthree fundamental issues:
1 Who .ire the users of accounting statements?
2 What is the purpose for which each particular type of user requires theinformation?
3 Mow can we provide the user with the information best suited to their needs?However, we have also to remember that the accountant and the user have tliein-
'.civcs to operate within, and under the control of, the community at large. There is,therefore, an element o! regulation that has to be taken into account.
USERS OF FINANCIAL REPORTS
As readers w i l l be aware, accounting can be divided into management accountingand f i n a n c i a l accounting. Very broadly, management accounting is designed for themanagement user, i.e. lor internal decision-making, and financial accounting isdesigned tor all other users. The theoretical distinction is that management, by definition,can obtain whatever information it needs from within the organisation,#p#分页标题#e#
External users, however, have to rely on negotiation or regulation in order to obtaininformation. Financial reporting is only concerned with external users and so is thishook.
Nine user groups can be suggested for-financial reporjing, as follows: : '
1 The equity investor group, including existing andpotential shareholders ariri hnlrtoro ni fo«u,w, yuujj, inuuuing arid holders of convertiblesecurities, options or warrants.
2 The loan creditor group including existing andpotential holders of debentures and loan, stockand providers of short-term secured andunsecured Joans and finance,
3 The'employee group Including existing, potentialand .past employees.
4 The analyst-adviser group, including financial: analysts and journalists, economists, statisticians,researchers,.trade unions, stockbrokers andother providers of advisory services; such as credit-rating agencies.
5 Suppliers and trade creditors, past, present andpotential.
.6 Customers, also past, present and potential!'
7 Competitors and business rivals.
8 The government, including tax authorities,departments and agencies concerned with thesupervision of commerce and industry and local
.authorities. •
M- 9 The public, including taxpayers, consumers andother Community and special interest groups,such as political parties, consumer andenvironmental protection societies and regionalpressi.ire groups,
Taking each of these groups one at a time, considerfirst • Ihe sjirt of decisions that they are likely to wish tomake using accounting information and. second, Ihe implicationsfro-'Ti this as to what information they might need. -
Activity feedback . . ' • . . - . .The equity investor group
Essential!/,., this group consists of existing and potentialshareholders. This group Is considering whether or not lo
http://www.ukassignment.org/Accounting_Essay/Advanced_Accounting_Theory___Prac/invest in a;ousiness: to buy shares or to buy more shares;or, alternatively, whether or not to disinvest, to sell shares
in the business. Equity investors look for one or a combinationof two things: income, a money return by way ofdividend, or capital gain, a money return by way ol sellingshares at more ttian their purchase price. It should beapparent lhat these two are closely related. Indeed, theonly difference is the timescale. However, the simpletheory Is made immensely more complex in practice bythe effects on share prices of other equity investors'expectations/ .. ,•:>'•' .' • . . . , ; ' • • ' : . ' ' - F - y - : • • ' , ' • ' ; . ' . - " ' .
For example, share prices for a company -may risebecause higher dividends are expected to be announcedby the company. Alternatively they may rise because otherpeople believe dividends will increase. A btiys\someshares in expectation of 'good news'. This causes pricesto rise, B then buys some shares in expectation of theprice rise continuing. This causes Ida price to rise again -a self-fulfilling prophecy .- which .brings in'C-as a:buyerloo. The original hope of 'good news' is soon forgotten: If,#p#分页标题#e#
however, at a later dale the news arrives and turns otil tobe bad, everyone involved. A, 8 and C, may want to''selland the price will come crashing down. " , ( ' . ' :; i-
The motivational : and psychological 'a'rgufnentsinvolved here are well .beyond the scope of this book. It •
is the Information requirements that concern us;-lf thejnvestor
is taking a short-term view then eurrenhdivideridsmay be a major factor. As the llrne horizon of .our inves-'V lor lengthens then future dividends become more impor-" ** tanl and future dividends are affected Crucially bypresent and future earnings. The focus then is on profits,which both determine lulure dividends and influence
the share price. One'obvious point is that investors, bdlh existing andpotential, need information about future profits, The emphasisin published accounting information1.Is, almostwholly on past or more or less present profits, These rilayor may hot be a good guide to the future, Trie-need .tomake the past results usefuMor estimating (guessing)the future is an important influence oh soine of ihedetailed disclosure requirements we shall explore:.later.The generaltrend is to make reported accounting state- •merits as. suitable as possible for the investor to makeIheir own estimations. We should note an alternative possibility,however. This is that the company itself -'through ,'.either Ihe management or possibly through the auditors -should make a forec'asl. After all, the management and
the auditor, have a much greater Insight .into possibilitiesand risks than Ihe external shareholder:' ' •
The loan creditor groupThis group consists ot long-, medium- or short-term lendersof money. The crucial question an existing or potentialloan creditor wishes to consider is obvious: Will lie or
指导assignment she get their money back? A short-term loan creditor willprimarily be Interested, therefore, in Ihe amount of cash abusiness has got or will very soon gel. As a safeguard,they will also be interested in thenet realisable value(NRV) of all the assets and the priority of the various6 , CHAPTER! 8ASICS OF FINANCIAL REPORTING
ACTIVITY 1.1 (Continued)
• claims, other thanilheir own, on the.-available resources;,
Longer-lerm lenders will clearly .need a correspondingly
longer-term view of the firm's future .cash position.
Their needs are thus similar to; the needs of -the -equityinvestor group--'they, need-to estimate the overallstrength,and position of the business some way Into thefuture.
The employee group
Employees or their representatives need financial informationabout the business for two main reasons:
1 fair and open collective bargaining (i.e. wagenegotiations)
2 .assessment of present and future job security.
In these respects they also need to be able to assess.the economic stability and vulnerability of the business
intoIhefuture." '•'. :V- - , .'..- • • • . • ' • ' • • ' - , ;#p#分页标题#e#
The employees, actual or potential, will also have^additional requirements, however; ;
1 They will often need detailed information at 'local'level, i.e. about one particular part of the business1or one particular factory. : '".;' :
2 They will need information .in a clear and simple
non-technical way. , , ".
3 They will need other information that is inherently, non-financial. They will want to know, for instance,about management attitudes to staff involvement : in decision-making, about 'conditions of .service'generally, promotion prospects arid sopn.Jt canthus be seen that the employee group may requireparticular statements for Its own use and that it ;may require information nbt.traditionally regardedas'financial'at all. !.:•• • : .... • - • •
The analyst-adviser group .
In one sense this is not a separate group, j l is a collectionof experts who advise other groups. Stockbrokers andinvestment analysts will advise shareholders, trade unionadvisers will advise employees,government statisticianswill advise Ihe government and so on. The needs of theanalyst-adviser group are obviously essentially the needsof the particular group they are advising. However, beingadvisers and presumably experts they will need moredetail and more sophistication in the information presentedto them.Suppliers and trade creditors need similar informationto that required by short-term loan creditors. But they willalso need to form a longer-term impression of the business'sfuture. Regular suppliers are often dependent onthe.'continuation;:of-'the1 relationship. They-may-wish toconsider increasing .capacity specifically for one'particularpurchaser. They will Iherelore.need to'appraise the futureof their potential customers-both,in terms of financial viabilityarid in terms of sales volume and market share.Customers will'wish to assess the reliability of thebusiness both in the short-term sense (will I get my goodson time and in good condition?) and in:the long-termsense (can! be sure of after-sales service and an effectiveguarantee?). Where long-term contracts are involved,the customer will need to be'particularly on his or her
guard to ensure that the business appears able to completethe contract successfully.. ;Competitors and .business, rivals will wish to increasetheir own effectiveness.and efficiency by finding out asmuch as possible about the financial! technical and marketingstructure of the business. The: business itself will naturallynot.be keen for .this information, to become generally
available'within the Industry and it is generally recognised; that businesses have a reasonable right to keep the causes•'of their-own competitive advantage secret/ Competitorsmay also wish to consider a merger or an amalgamation ora straight takeover, bid. For this purpose .they need all this
information,plus the information required by the equity in-':' veslorgroup. They also need information about what they -the bidders'.-:could do with the business. In other words,they need to be able to form an opinion on both: '#p#分页标题#e#
• what the existing management is likely to achieve
• and what-new managemertl could achieve with
. different policies.
The government
Everybody is aware lhat governments require financial information
for purposes of taxation:;This may be the most
obviously apparent.use by governments, bur it Is not necessarily
the most important. Governments also need infor-
. mation for decision-making purposes': Governments today
take many decisions affecting particular lirms or particular
industries, .both in a control sense and in government's
capacity as purchaser or 'creditor. Also, governments
need information on which,to base their economic decisions
as regards the economy as a whole. This information
is likely to need to be very .detailed and to go well beyond
the normal historic Information included in the usual published
accounting reports. Again, there is an obvious need
for future-oriented information,
T h e public, ' . . . . .
Economic entities, i.e. businesses in the broadest and
most general sense, do not exist in isolation. They are
CHARACTERISTICS OF USEFUl INIOI
ACTIVITY 1.1 [(Continued)
part of society at large and they react and interact with
society al every level. At the local level, there will be
concern at such things as employment, pollution and
health and safety. At the wider level, there may be interest
in, for example, pollution and 'green' issues,
energy usage, affective use of subsidies, dealings with
foreign governments 'and contributions to charfl
money or kind. Much of this information is non-fidB
Indeed, some of It cannot be effectively maasH
all. Whether it is accounting information is anl
question. But it is certainly useful information m
businesses.
Summary of user needs
Several general points emerge from the preceding discussion:
1 Many, although not all, of the information requirements are essentially
forward looking.
2 Different users, with different purposes, may require different infbrmati
about the same items. rmation
3 Different users will require (and he able to understand) different degrees of
complexity and depth.
4 Not nil the information required is likely to he included in financial accounts.
| CHARACTERISTICS OF USEFUL INFORMATION I
' Make-a list of the desirable attributes or-characteristics
(such as relevance, for example) that financial information
should have if it is likely to be useful. ••• ,
Activity feedback H
Seven general ideas occur to us, as follows. ,• •••;,
Relevance
This sounds obvious, but on reflection is difficult to define
and therefore to achieve. A report must give the user
what he or she, wants. As already indicated this presupposes
that we, Ihe accountants preparing the report,#p#分页标题#e#
know:
1 who Ihe user is
2 what their purpose is
3 what information he'or she requires for this
purpose.
Clearly these requirements may change as time
goes by.
Understandability
Different users will obviously have different levels of M
ity as regards understanding accounting informaM
Understandability does not necessarily mean simpliol
• II means that the reports musl be geared lo Ihe abilili
and'knowledge of the users concerned. Complex it
nomic activities being reported lo an expert user (•
well require extremely complicated reports. Sir™
指导assignment aspects being reported lo users with little or no hM
ground knowledge will need lo be very simple. The prj
lems really arise when we have the task of reporlinfj •
complex activities but to the non-expert user.
Reliability
The user should be able to have a high degree of COM
dence in the information presented to him or her, 1H
does not necessarily mean thai (he information lias ifll
factually correct, taut it should be as credible, as b«H
able, as possible. Preferably, it should be independ^B
verified, e.g. by an independent, qualified aurlllfl
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