Financial Accounting Essay Example | Topics and Well Written Essays - 1000 words

Financial Accounting - Essay Example Further an analysis is made to understand which of the two objectives is apt for the GPFR. Also an analysis is made to understand if the proposal of the IASB has helped improve the GPFR. A conclusion is then drawn out based on the discussion. However to discuss this further it is essential that we first understand what general purpose financial reports deal with. The next section focuses on understanding general purpose financial reports in detail. The Statement of Accounting Concept (SAC 1) explains general purpose financial reports as reports that are intended to meet the needs of common users who are unable to command the preparation of reports tailored to their specific needs. Also GPFRs can be produced by entities that have users who cannot command the preparation of specific information. The entities are required to be reporting entities and if they are not deemed to be report entity then it would not require producing a GPFR and would not require complying with all the accounting standards (IASB, 2008). GPFRs are not produced for a single group of users. It has grown from the basic need of all groups of users who need financial information. However there are conflicts between the groups since almost every group require different information for example suppliers and lenders vs. the shareholders, or the senior management vs. the employees. Shareholders require a more detailed report which helps them analyses the profitab ility, whereas lenders and suppliers require the report to be made for them to be more conservative. Similarly senior management would have concerns about the profits that are reported as if the profits are reported to be high the chances of increase in wage demanded will also be high. The main objectives of general purpose financial reports of the Australian accounting standards board is to provide reliable and