Finance Essay

714 Words Mar 5th, 2015 3 Pages
Task 1: By reference to the IASB’s Conceptual Framework analyze the usefulness of Kingfisher’s financial statement.

The IASB Framework is a conceptual accounting framework that sets out concepts that will be used to prepare and present the financial statements for external users. Providing useful information to the users is a major objective of financial statements of a company.

Different financial statements are aimed to render different kinds of information about a firm’s financial aspects. Balance Sheet shows the financial position of a firm. Income Statement provides information about progress in performance of the firm, whether its making profit or not. Changes in financial position of the company will be known from Cash Flow
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Because there is all the information relied that are relevant to make an investment decision to the company. For example, if the profit or sales revenue of kingfisher is at good value or the earning per share is high, then it shows the picture of a suitable performing company to invest his/her money. Again, the investor can compare the performance of kingfisher by evaluating past year’s share prices with the following year. So that he can decide whether to buy/hold/sold the share.

The financial information in the statements must present a complete, free from errors and unbiased economic phenomena of the company, to be called as useful information. Kingfisher shows its all the financial information in relevant sections of statements and follows the IFRS standard for full disclosure of assets and liabilities and fair value measurement. If it will show a booming profit through designing the accounts by their own wish or if it will focus more on the company’s short term profit and give less focus or a partial projection on the company’s heavy liabilities, then the statements of kingfisher will fail to give a faithful representation of information. That information is not to be called useful for any kind of users.

Some more qualitative characteristics are able to enhance the usefulness of information that is relevant and faithfully represented. This includes, Comparability, Verifiability, Timeliness and

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