Group Assignment

Intermediate Accounting



Submitted to : Shabbir Mubin

Submitted by : Mehedi Hasan ID- 1210212030

Mumu Benzir Alam ID- 1211189030

Tanvir Turzo ID- 1210193030

Samiha Fairuz ID- 1121132030

Nahida sultana ID - 1210618030

Course : Act 330

Sec : 07




Course : Act 330
Section : 07



Answer to the question no. 1


Conceptual Framework:

Conceptual framework is the sole part of financial accounting and financial reporting. It is a
coherent system of interrelated objectives and fundamentals that can lead to consistent rules and
that prescribes the nature, function, and limits of financial accounting and financial statements.
It is a kind of constitution.

Roles:

Conceptual framework is to be useful and rule-making should build on and relate to an
established body of concepts and objectives. It increases financial statement users
understanding of and confidence in financial reporting. It results a coherent set of GAAP.
It is used to solve new and emerging practical problems by referring to an existing
framework of basic theory.
It provides guidance to identify the boundaries of financial reporting, selects the
transactions, other events, and circumstances to be represented. It also helps to
reorganization, measurement, summarization and the reporting of financial accounting.
Developments:

The IASB and FASB both of these two have a conceptual framework. The IASBs conceptual
framework is described in the document, Framework for Preparation and Presentation of
Financial Statements.
Numerous published their own conceptual framework, but no single framework was universally
accepted and relied on the practice. In 1976 the FASB began to develop a conceptual framework
that would be a basis for setting accounting rules and for resolving financial reporting
controversies. The FASB issued six Statements of Financial Accounting Concepts (SFACs) that
relate to financial reporting for business enterprises. These concept statements provide the basis
for the conceptual framework.
i. SFAC No. 1- Objectives of Financial Reporting by Business Enterprises: First, the
objective of financial reporting is to provide information about the company that is useful
to potential investors, creditors and lenders in making decisions about the company.
Because these parties cannot require that companies provide this information about
company resources and claims on the company's assets, they rely on financial reports to
give summaries of this information.

ii. SFAC No. 2- Qualitative Characteristics of Accounting Information: The second
section provides information on what makes financial information useful and how to
balance usefulness with cost considerations. This section of the conceptual framework
tells financial statement users that information should be relevant and faithfully represent
the underlying economics of the company. Additionally, the section provides guidelines
for how to enhance these characteristics.

iii. SFAC No. 3- Elements of Financial Statements of Business Enterprise, provides
definitions of items in financial statements, such as assets, liabilities, revenues, and
expenses. This section might be the most useful for a small-business owner.

iv. SFAC No. 5- Recognition and Measurement in Financial Statement, sets forth
fundamental recognition and measurement criteria and guidance on what information
should be formally incorporated into financial statements.

v. SFAC No. 6- Elements of Financial Statements, provides information about the
accounting for not-for-profit entities and some of the differences between for-profit and
non-for-profit accounting.

vi. SFAC No. 7- Using Cash Flow Information and Present Value in Accounting
Measurements, provides a framework for using expected future cash flows and present
values as a basis for measurement.


Objectives:

The Financial Accounting Standards Boards Statements of Financial Accounting Concepts No. 1
states the objective of business financial reporting, which is to provide information that is useful
for making business and economic decisions. Specifically, the information should be useful to
investors and lenders, be helpful in determining a company's cash flows, and report the
company's assets, liabilities, and owners equity and the changes in them.
With these objectives in mind, financial accountants produce financial statements based on the
accounting standards in a given jurisdiction. These standards may be the generally accepted
accounting principles of a respective country, which are typically issued by a national standard
setter, or International Financial Reporting Standards, which are issued by the international
accounting standards Board.
The broad objects of Accounting may be briefly stated follows:
1. To maintain the cash accounts through the Cash Book and to find out the Cash balance on
any particular day.
2. To maintain various other Journals for recording day-to day non cash transactions.
3. To maintain various Ledger Accounts to find out the exact amounts of incomes and
expenses or gain and losses or receivables and payables.
4. To furnish information regarding Purchases and Sales, both Cash and Credit.
5. To find out the net profit or net loss or surplus or deficit for any particular period.
6. To find out the total capital on a particular date.
7. To find out the positions of assets on a particular date.
8. To find out the position of liabilities on a particular date.
9. To detect any defalcations and to check the frauds and misappropriations of money.
10. To detect the various errors and to rectify those through entries in the journal proper.
11. To confirm about the arithmetical accuracy of the books of accounts.
12. to help the management by supplying accounting ratios, reports and relevant data.
13. To calculate the cost of productions.
14. To help the management formulate policies for controlling cost, preparation of
quotation for competitive supply etc.

Answer to the question no. 2
Accounting information helps in decision making
The use of Accounting Information in view of the nature of business environment of today
cannot be over emphasized. The managers of whatever firm or business organization need
information to enable them direct the affairs of the business in line with the desired objectives.
Accounting information thus, provides a basis on which these objectives may be achieved. The
purpose of this assignment is to find out the influence of accounting information in management
decision makings and the extent of such influence if any. The study commenced by examining
the nature of accounting information and its relationship with management decision making. The
relations of accounting information with national control system, the qualitative features of
accounting information, uses of this information among others were highlighted. The methods
used for this study were from primary and secondary sources. The study employed the use of
designed questionnaire. Other methods used in gathering primary data were personal contact,
direct interview and personal observation. These data were analyzed using simple percentage
method. The study revealed that the use of accounting information is an indispensable tool for
Management decision making for effective control. It was recommended that the Management
should take the use of Accounting information as a guiding rule for effective decision making in
order to maximize the potentials of the organization.

Relevant Cost Analysis
Managerial accounting information is used by company management to determine what should
be sold and how to sell it. For example, a small business owner may be unsure where he should
focus his marketing efforts. To evaluate this decision, an accounting manager could examine the
costs that differ between advertising alternatives for each product, ignoring common costs. This
process is known as relevant cost analysis and is a technique that is taught in basic managerial
accounting courses. The same process can be used to determine whether to add product lines or
discontinue operations.
Activity-based Costing Techniques
Once the company has determined what products to sell, the business needs to determine to
whom they should sell the products. By using activity-based costing techniques, small business
management can determine the activities required to produce and service a product line.
Embedded in this information is the cost of customers. Deciding which customers are more or
less profitable allows the business owner to focus advertising toward the consumers who are the
most profitable.

Discussion on Bangladesh Accounting Standards

Accounting standards determines the country's accounting regulations and policies which
recommends the content that should be reported in a company's financial statements
within that expanse. The core reason for implementing accounting standards is to ensure
nationwide adaptation of dependable and consistent accounting approaches. The benefit
of applying accounting standards is that it reduces the chances of material misstatement
in accounts. Also, it provides comparable information which helps the investor in making
better decisions. Accounting standards are set out by a country's law and all the
companies existing within the country must maintain them.
In Bangladesh, the accounting and reporting standard followed by the companies are
BFRS and BAS. Every company within the country, except few exceptions is entailed to
apply the standards. Both private and public companies in Bangladesh are controlled by
the companies Act 1994, which holds the fundamental rules to be followed by the
companies. The institute of chartered Accountants in Bangladesh has set down the
financial reporting standards which are called Bangladesh Financial Reporting standards
(BFRS) that also includes Bangladesh Accounting standards (BAS). BFRS is a close
representation of International Accounting Standards (IAS) which was issued by the
International Accounting Standards Board. Initially, the BFRS was built up using older
International standards as a basis. At recent times, it has accepted the more updated IASB
standards as BFRS.
Bangladesh Accounting Standards (BAS) suggests the foundation for the preparation of
financial statements as to ensure the information is comparable with the organizations
financial statements from prior years of operations and as well with other companies. It
provides the requirements of presenting financial statements, principles and rules for the
structure and the minimum requisite for the content.
In accordance to the BAS, a complete set of financial statement must include:
A statement of financial position at period end
A statement of comprehensive income for the period
A statement of changes in equity for the period
A statement of cash flows for the period
Notes, comprising a summary of significant accounting policies andother explanatory
information
A statement of financial position as at the beginning of the first period when the company
has applied an accounting policy or makes a display of restatement of items in its
financial statements, or when it re categorizes items in its financial statements
A company should clearly identify each of the required financial statement along with the
notes. Furthermore, in order to make the information provided useful and easily
understandable, an entity must give significance to including the following information:
Name or other identification of the reporting organization and any change from previous
year must be notified.
It should be mentioned whether the reports belong to an entity or a group of entities.
Date of the end period
Presentation in currency
The rounding that has been used to present the values in preparing the financial accounts.
Bangladesh accounting standards plays a vital role in regulating the accounting system in
our country. It is important for the procedures to run smoothly and it is greatly helpful to
the users of financial reports. The standards displayed by BAS have been modified much
more from the time of its commencement and the standards are expected to advance even
more in the future



Reference:
http://www.journalofaccountancy.com/Issues/2013/Feb/20126984.htm
http://www.fasb.org/jsp/FASB/Page/SectionPage&cid=1176156245663
Nortwestern Journal of International Law & Business (Vol. 25, Issue 3 Spring)
Intermediate Accounting (13
th
Edition) (Interantional Student
http://dspace.futa.edu.ng:8080/jspui/handle/123456789/2353