Finance Assessed Coursework Essay Example | Topics and Well Written Essays - 2000 words

Finance Assessed Coursework - Essay Example ct with each other and how the reporters of financial information struggle to strike a balance among these attributes to ensure the usefulness of information for the user. According to the U.S. GAAP Codification of Accounting Standards, financial statements of an enterprise comprise of profit/loss statements, balance sheets, statement of cash flows and an account of stockholders' equity. These statements, combined with additional financial analysis tools and formulae constitute the financial information which in turn serves the needs of the wide range of users of financial information. ... he financial performance of organizations or the general public which might be interested in gathering information for various reasons (Gibson, 2011). In order to satisfy the needs and requirements of the users of financial information, the accountant's job is essentially to maximize the usefulness of the information to facilitate the users and to fulfil the expectations of the users with regard to the accuracy of the information. Along with the reporting being simply and evidently comprehensible, analogous and unswerving, it should also be relevant, reliable, material, neutral and definitely prudent (Rich et al. 2010). In the following paragraphs, I shall proceed to discuss the latter five characteristics mentioned in an orderly fashion along with highlighting the challenges faced in ensuring the effective implementation of these qualities. Relevant financial information is that which has the ability to influence decision-making of the users and is meaningful. It assists them to mak e informed judgments on the basis of past events, accurate decisions in relation to the present scenarios and wise forecasts about future events along with facilitation in correct evaluation of situations. Data that fails in influencing the decisions in the appropriate manner is futile for the users regardless of whether it represents external phenomena or whether it conforms to the other user-oriented criteria (Rosenfield, 2006). For example, a supplier who is planning to sell goods to a company on credit will find the total cash balance in the cash flow statement of that company relevant since it will enable him to assess the liquidity position of the company. Likewise, a prospective shareholder of a company would surely desire to discern the profitability state of the company so that he