Submitted by: Submitted by

Views: 338

Words: 1216

Pages: 5

Category: Business and Industry

Date Submitted: 09/08/2011 08:50 PM

Report This Essay


In the present age, general purpose financial reporting is playing increasingly important roles in most firms’ lives. The firms have to offer their financial information to their users consisting of both internal and external ones. As the Australian Standards Boards has issued that general purpose financial reporting must provide useful data to assist its users to make economic and efficient decisions in economic transactions and events. The purpose of this essay is to illustrate the nature and objectives of general purpose financial reporting wonderfully.

“General purpose financial reporting is not an end in itself, but is a means of communicating relevant and reliable information about a reporting entity to users.” (Public Sector Accounting Standards Board 1990) It is based on the collection, processing and summary of day-to-day accounting information. GPFR reflects the situation of a firm’s assets, liabilities and proprietorship at a given time. Furthermore, it also reflects business performance and the information of cash flows during an operating period. It mainly consists of five items which illustrate different aspects of a firm’s financial situation. The first one is Balance Sheet. From it, we can know a firm’s assets, liabilities and the owner’s equity. It reflects the financial situation of accounting entity at specified time. The second one is income statement; it shows us a firm’s income, expenses and P&L, and then measuring the net profit of a firm at a given period. It focuses on embodying a firm’s business performance. The third one is statement of cash flow; it identifies cash inflows and outflows of a firm at a set period. The fourth one is statement of changes in equity; it is the reporting which reflects the changes of proprietorship in a firm from current period to the end. The last one is notes to financial statements. It is used to reveal additional financial information of the reporting. Firms can use these five items to...