FINANCIAL ACCOUNTING

Financial Accounting



Financial Accounting

Introduction to IASB

The IASB (International Accounting Standards Board) is an, privately-funded, independent accounting standard-setter founded in London, England. It was established on April 1, 2001 as the descendant to the (International Accounting Standards Committee). It is accountable for formulating International Financial Reporting Standards, and encouraging the function and function of these values (IASB, 2010). To meet the essential quality, users must possess a knowledge fair on the business, economic and accounting activities. Users must be willing to examine the financial information with reasonable diligence. However, because of the importance of the need for the decision making by economic means, users should not exclude information on the grounds of creating difficulty in understanding.

Conceptual Framework

The conceptual framework was to be used as a guide in the development of consistent accounting standards, hopefully leading to a more coherent set of accounting principles to aid practice. Components of the framework included objectives and charactertics of financial reporting and financial statements, recognition criteria, measurement attributes, financial statements, earnings, cash flows and liquidity (IASB, 2010). This pioneering work was viewed favorably by international audiences and many of its basic concepts influenced the development of similar frameworks by other accounting standard setters. While there are many similarities between the respective FASB and IASB frameworks, there are differences as well. Given that the frameworks were to be the basis for the development of accounting standards, the practical result has been that different standards have been promulgated by the FASB and IASB. The IASB's SFAC No. 1 focuses on financial reporting while the IASB Framework focuses on financial statements. The board's conclusion derived that the objective should be broad enough to include financial information reported beyond financial statements (IASB, 2008, 77). Both the boundaries of financial reporting and where specific types of information are best placed within financial reporting is deferred to a later phase of the project.

Debenture loan.

When a company needs a large amount of money for its expansion, there are many ways to raise capital for the purpose. One of these financial tools is called debentures. This is a way of inviting general public to subscribe to its offer of attractive rates of interest on the certificates issued by the company. These certificates are called debentures and are a type of unsecured loan as company does not need to give any collateral to the people subscribing to these debentures (Alexander, 2008, 87). Debenture loan is the financial assets of the credit institution, provided in the form of cash or other assets directly to the borrower, except when they are available for immediate assignment of them in the near future or in the short term. Loans originated by the Bank in the form of cash directly to the borrower or the syndicated loan (other than those provided with the intent of immediate or emergency sale and are recorded as trading assets) are classified as loans and advances.

The interest rate of the loan is increased from 8% to 10% as per the recent ...