• Summary
  • Contents
  • Subject index

The adoption by the Accounting Standards Board of its Statement of Principles for Financial Reporting in December 1999 means that we now have an authoritative conceptual framework which should govern the production of British financial statements. Yet while the text of the Statement is directed at members of the accounting profession, students of accounting will need to understand the framework and its repercussions. An Introduction to Modern Financial Reporting Theory explains the content of the Statement in an accessible language, specifically for the student of accounting and finance. This text will be of direct and practical interest to students who need to understand the contents of the new framework, which helps to explain: why and how financial reporting is carried out; why financial statements are prepared in the way that they are; why accounting standards specify one method rather than another; how the methods specified by accounting standards relate to each other; how practice has developed and will continue to develop. Brian Rutherford emphasizes and enlarges on the key features of the framework, provides many more examples, shows how the framework applies in practice and also offers some criticisms of its content. The book clarifies to students why various methods and practices in accounting have evolved, while illustrating how they relate to each other and to the underlying function of financial reporting. This text will be essential reading on university and professional courses in advanced financial accounting, particularly courses on Accounting Theory and Financial Reporting. Brian Rutherford is Professor of Accounting at Canterbury Business School, University Kent at Canterbury.

Measurement
Measurement

We have seen that measurement is the last stage in arriving at the accounting numbers that appear in financial statements: an item must first meet the definition of a statement element; the recognition criteria must then be satisfied; finally it is measured. In examining measurement, the Statement of Principles focuses on the debate between two measurement bases, namely historical cost and current value, while conceding that each of these itself has variants (SP, 6.1). The Statement requires that the measurement basis employed for each category of assets and liabilities should be selected to meet the objective of financial statements and the demands of the qualitative characteristics of financial information. It points out that there are two possible approaches to the specification of a measurement ...

  • Loading...
locked icon

Sign in to access this content

Get a 30 day FREE TRIAL

  • Watch videos from a variety of sources bringing classroom topics to life
  • Read modern, diverse business cases
  • Explore hundreds of books and reference titles