Answer To: In this assignment you need to read the paragraph and answer it as required.when you anser can you...
Pulkit answered on May 22 2020
TASK-A
Financial reporting stands to provide qualitative information which helps in making economic decisions. The importance of financial reporting is that it is able to influence decision of individuals who is going to make investment helps in allocating resources which will enhance market efficiency. It helps in making decisions by creditors, lenders and investors in making decision with respect of providing resources to entity.
The major difference between IFRS and GAAP is of qualitative characteristics while GAAP functions with characteristics like Relevance, Reliability, Comparability and Understandability based on circumstances of individuals while IFRS functions within the same characteristics but it does not deal with circumstances of individual.
The qualitative characteristics of financial statements are-
1. Understandability- The information should be presented in a way and supplied with additional information so that it helps in making decisions of users of financial information.
2. Relevance- This involves that particular information is able to influence the decision of users and omission of it will affect the decision of user of financial information.
3. Reliability- The information should be reliable and not misleading. It is should be free from material error and should fairly present the financial position of system.
4. Comparability- The information should be present in comparable form so that user of financial information is able to analysis trend and growth of the entity.
There are certain other factors also which will affect the decision of the persons which involves materiality refers to the information which is essential for fair representation of framework and omission of it leads to misleading decisions. Faithful representation refers to presentation of financial statement should be faithful enough that helps in decision making. The presentation of financial statement should be such that it fairly represents the actual financial position of entity.
TASK-B
This refers to whether specific regulation is needed in corporation act for the company to fulfill corporate social responsibility but the government after the enquiry mention that no specific regulation is needed but the company will fulfill its responsibility on the basis of market forces.
The decision is based on the basis of following theory-
a) Public Interest Theory-
This refers to theory in which it takes into account the welfare of general public and it works on the principles of the effectively managing market practices to works for the welfare...