Question

1: Who are the users of general purpose financial report? What is there information need?

2. How would you improve understability quality of financial report?

3: What is the significance of business model understanding in accounting

Indian account

Answer 1

1)

The users of general purpose financial report are owners, investors, management, suppliers, lenders, employees, customers, the government and the general public.

Owners need information to take a decision that whether the entity is in going concern state. Investors need information to assess whether to buy, sell or hold the investments. Employees need the information to know the stability, continuity and growth of enterprise and its ability to provide benefits. Lenders to know whether their loan- principal and interest will be paid when due. Customers to know the ability of enterprise because functioning is more or less dependent on supply of goods or services.

2)

• Consistency in accounting policies.
• Increase in non financial disclosures in annual report.
• Use of international financial reporting standards.
• Centralising the information.
• Securing the data.
• It is necessary to have simplicity in financial statements.
• The information presented in the financial statements should be reliable.

3)

A proper business model helps you out to figure out elements few important elements.

Business models in accounting explores what insights might be gained from the economic theory of the firm, specifically in relation to the measurement issues in financial reporting. It also helps us in the preparation of financial statements and the procedure of preparing. It also suggests where the firm's business model to transform inputs so as to create new assets or services as outputs, we would expect that historical cost would generally be the most useful basis of measurement.