Group Assignment

Intermediate Accounting

Submitted to:Shabbir Mubin

Submitted by :Mehedi Hasan ID- 1210212030

Mumu Benzir Alam ID- 1211189030Tanvir Turzo ID-1210193030

Samiha Fairuz ID-1121132030

Nahida sultana ID -1210618030

Course :Act 330

Sec :07

Course:Act 330Section: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:

1. 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.1. It is used to solve new and emerging practical problems by referring to an existing framework of basic theory.1. 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 equityand 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 standardsBoard.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. 2Accounting information helps in decision makingThe 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 AnalysisManagerial 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 TechniquesOnce 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 statementsA 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.htmhttp://www.fasb.org/jsp/FASB/Page/SectionPage&cid=1176156245663Nortwestern Journal of International Law & Business (Vol. 25, Issue 3 Spring)Intermediate Accounting (13th Edition) (Interantional Studenthttp://dspace.futa.edu.ng:8080/jspui/handle/123456789/2353