Question: CASE STUDY Jasim & Sons is a leading construction company in the UAE. You are a fresh university graduate who has been hired by the
CASE STUDY
Jasim & Sons is a leading construction company in the UAE. You are a fresh university graduate who has been hired by the manager of the company, Abdulla, as a junior accountant. You have recently completed the companys orientation training and today you (as a trainee) will be working with the manager to help out in various accounting activities. During a discussion, Abdullah highlight the following information to you;
Accounting is the information system that identifies, records, and communicates the economic event of an organization to a wide variety of interested users. The worlds economic systems depend on highly transparent and relevant financial reporting that provides a true representation of the economic events. When that does not happen it can create a disaster. Lehman Brothers, a major United States bank, used misleading accounting practices to reduce its debt and make its financial position healthier than it was. Not only were the Lehman Brothers investors and lenders unaware of the banks financial difficulties when the company went into bankruptcy, but economists believe the bankruptcy was a major contributor to the worldwide economic crisis that began in 2008.
A vital element in communicating economic event is the accountants ability to analyze and interpret the reported information. Analysis involves using ratios, percentages and graphs to highlight significant financial trends and relationships. (This piece of text is adopted material from Accounting Principles Volume 1, published by Wiley 2016).
Abdullah wanted to make sure that you are aware of up-to-date knowledge of accounting practices, rules and regulations. He has assigned you a project to answer the following questions in this regard;
As a trainee accountant, your manager is expecting explanation on the following area;
- What is meant by conceptual framework for financial reporting in accounting? (10 marks)
basic document that sets objectives and the concepts for general purpose financial reporting
The objective of general-purpose financial reporting is to provide financial information
about the reporting entity that is useful to present and potential equity investors, lenders,
and other creditors in making decisions about providing resources to the entity.
The objective of general-purpose financial reporting is to provide financial information
about the reporting entity that is useful to present and potential equity investors, lenders,
and other creditors in making decisions about providing resources to the entity.
The objective of general-purpose financial reporting is to provide financial information
about the reporting entity that is useful to present and potential equity investors, lenders,
and other creditors in making decisions about providing resources to the entity.
The objective of general-purpose financial reporting is to provide financial information
about the reporting entity that is useful to present and potential equity investors, lenders,
and other creditors in making decisions about providing resources to the entity.
The objective of general-purpose financial reporting is to provide financial information
about the reporting entity that is useful to present and potential equity investors, lenders,
and other creditors in making decisions about providing resources to the entity.
framework
The objective of general-purpose financial reporting is to provide financial information
about the reporting entity that is useful to present and potential equity investors, lenders,
and other creditors in making decisions about providing resources to the entity
framework
The objective of general-purpose financial reporting is to provide financial information
about the reporting entity that is useful to present and potential equity investors, lenders,
and other creditors in making decisions about providing resources to the entity
Overview of the Conceptual Framework Three levels:
First Level =Objectives of Financial Reporting
Second Level =Qualitative Characteristics and Elements of Finacial Statements
Third Level Recognition, Measurement, and Disclosure Concepts.
- What is the purpose of conceptual framework? (5 marks)
The Purpose of a Conceptual Framework To set out the concepts that underlie the preparation and presentation of financial statements. To provide the concepts on which uncertainties relating to different accounting estimates, and judgments are based.
- Your manager mentions Lehman Brothers case of misrepresentation. Explain the relevence and faithful representation and why it is considered that these priciples were breached in the case of Lehman Brothers? (10 marks)
to reduce its debt and make its financial position healthier investors and lenders unaware of the banks financial difficulties when the company went into bankruptcy
- You are also required to shed light on enhancing charateristics. What are enhancing characteristics and why these are important in accounting? (10 marks)
Analysis involves using ratios, percentages and graphs to highlight significant financial trends and relationships.
- You are also required to explain recognition and measurement. (6 marks)
- When it refers to various organizational structure, how would you distinguish between the legal and the commercial view of accounting. Support your answer with an example. (6 marks)
- When preparing financial statement, explain in detail what does it mean by impairment of assets. Explain by providing an example. (6 marks)
- Use the link provided and elaborate on five financial reporting standards. What is meant by IFRS and IAS standards. (10 marks)
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