Advanced Accounting Theory & Practice Essay Example | Topics and Well Written Essays - 2000 words - 1

Advanced Accounting Theory & Practice - Essay Example For that objective, the standard has classified different economic units as assets, equity, liabilities, income, expenses and cash flows. This classification is used to prepare and present different types of financial statements such as statement of financial position, statement of comprehensive income, statement of changes in equity and statement of cash flows. The IAS 1 provides different qualitative characteristics which are highly essential to be depicted by the financial statements. Fair presentation suggests that the financial statements faithfully represent the effects of the economic transactions and conditions which must be complying with the framework definition, recognition and measurement criteria for assets, equities, liabilities, income and expense as well. In the following parts of this paper, first key features of IAS 1 along with different types of financial statements have been accounted for. Subsequent to that, a description elaborating qualitative characteristics has also been included. It is followed by illustrative example representing how Royal Dutch Shell prepares and presents its consolidated statement of comprehensive income. Before the conclusion, critical evaluation of IAS 1 has been described to highlight the shortcomings of the accounting standard. International Accounting Standard (IAS 1) provides a framework for the Preparation and Presentation of Financial Statements. IAS 1 prescribes that the basis for presentation of ‘general-purpose financial statements’1, defined as statements develop to meet the needs of the users who require an entity to prepare reports tailored to their important information needs. This definition covers both consolidated and separate financial statements. Interestingly, IAS 1 does not specifically apply to the structure, content and form of interim financial statements, which are detailed in IAS 34 Interim Financial Reporting, but many of its basic underpinnings such as consistency