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

Advanced Accounting Theory & Practice - Essay Example Since then, more and more countries are adopting IFRS.1 IASB sets down accounting standards for the accounting policies that a company under IFRS must follow. These accounting standards are in accordance with the requirements of Conceptual Framework which assist users of financial statements to take various financial decisions. IASB are in continuous effort to improve the accounting standards in order to prevent creative accounting practices by companies and help representing the true and fair view about the financial conditions and performance of the companies. IAS 1 which sets out guidelines regarding presentation of financial statements, its key features, changes in its recent revision by IASB, and finally criticism with regards to these changes, all have been covered in this study. Effects of changes in IAS 1 on Coca Cola Co. have also been studied. Key Features of IAS 1 Objective IAS 1 sets the guidelines to be followed in the presentation of financial statements made by an orga nisation. The presentation is made for the purpose of comparability with the company’s financial statements related to preceding periods. It also ensures that the financial statements of the company can be compared with other business entities as well. IAS 1 includes comprehensive requirements about how the financial statements are presented, rules about what would be its structure and the minimum requirements about what its contents will include.... cial statements are presented, rules about what would be its structure and the minimum requirements about what its contents will include.2 Scope IAS 1 is applicable to all the financial statements which are made for general purposes and is in accordance with International Financial Reporting Standards (IFRS). Financial statements used for general purposes are prepared with the intention that it would be required by the person who do not require financial reports to be used by them to cater to some particular information requirement.3 Financial Statements and its Components According to IAS 1, financial statements comprises of the following five components: 1. Balance Sheet: It is a statement which depicts the financial position of a business entity at the end of the period. 2. Income Statement: It is a statement explaining the comprehensive income of a business entity at the end of the period. 3. Statement of Shareholders’ Equity: It is a statement showing the increase or decr ease in equity of the business entity for the period. 4. Cash Flow Statement: It is a statement showing the cash flows of the business entity for the noted period. 5. Notes: It comprises of the accounting policies followed by the business entity in a summarised form. It also includes other explanatory notes of the business entity.4 IAS 1 does not require a business entity to use the same titles of the financial statements as stated above. They can use other titles as well. If we look at the annual reports of Coca Cola Co. for the year ending on December 31, 2011, we can find that all these components of financial statements are mentioned. Along with these there are other reports prepared by Coca Cola like, Report of Management, Report of Independent Registered Public Accounting Firm, etc. which