Task 1
Analysis of usefulness of Kingfisher’s Financial Statements
Qualitative characteristics are the attributes of the useful financial statements.
There are two types of qualitative characteristics Fundamental and Enhancing, for analysis purpose. Fundamental characteristics distinguish useful financial information from the information that is not useful or misleading. Enhancing qualitative characteristics distinguish more useful information from less useful information.
The two fundamental qualitative characteristics are:
(a) Relevance: Relevant i.e. the information has predictive value or confirmatory value, or both. It is capable of making difference in the decisions made by users,
(b) Faithful representation: information must be complete,
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Verifiability helps ensure users that information faithfully represents the economic phenomena it purports to represent. The information in the Kingfisher’s financial statement has been faithfully represented, as their accounts are being audited by a big four firm named Deloitte
Timeliness
Information becomes less useful if there is a delay in reporting it. Conversely, if every detail of transaction is known, it may be too late to publish the information because it has become irrelevant.
Understandability
Financial reports are prepared for users who have a reasonable knowledge of business & economic activities and who review and analyze the information diligently. The kingfisher’s financial statements are made in a way that they even try to elaborate the complex accounting standards in the notes so that it will become easier for the users to understand financial statements.
Task 2
(a) Brief notes based on Kingfisher’s Financial
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Information is based on internal management reports, both in the identification of operating segments and measurement of disclosed segment information. (IFRS 8)
Extensive elements deliver an extensive variety of items and administrations, frequently in a few diverse nations. Additional data on how the general aftereffects of elements are made up from each of these item or land zones will help the clients of the budgetary explanations. This is the motivation behind why section reporting examination is imperative with the end goal of Performance
“The current financial year is the 52 weeks ended 1 February 2014 with the comparative financial year being the 53 weeks ended 2 February 2013. This only impacts the UK & Ireland businesses with all of the other businesses reporting on a calendar basis as a result of local requirements. The effect of the 53rd week on the results of the Group in 2012/13 was the inclusion of an additional £72m sales and an immaterial benefit to retail profit.”(Kingfisher pg#89, para
In accounting there is much to be learned, about the financial aspects of a business. In the past five weeks I have learned the importance of financial reports and how they relate to the success of an establishment. These reports may include balance sheets and income statements, which help accountants and the public grasp the overall financial condition of a company. The information in these reports is really significant to, managers, owners, employees, and investors. Managers of a business can take and deduce financial
Entity-wide disclosures are required under Accounting Standards Codification (ASC) 280-10-50-40 through 280-10-50-42. The disclosures are required because every corporation does not report information in a similar fashion, and the disclosures would provide comparability of the financial statements among entities. For example, if a corporation uses a geographic approach in its financial statements, disclosing certain information about the products or services sold will make comparability to other companies much easier. The disclosures will also help with comparability within an entity if they decide to choose another method of reporting operating segments in the future. There are three types of entity-wide disclosures; products and services, geographic areas, and/or major customers. Every public company has to comply with the disclosures, even if the company has one reportable segment. The only exception to the entity-wide disclosures is if it is impractical to provide the information, such as it would be extremely costly to the corporation, or if the “internal reporting systems are not capable of gathering financial information by product or service by geographic area.” A disclosure should be made when entity-wide disclosures are impractical.
Mohana, R (2011). Financial Statement Analysis and Reporting. New Delhi: Asoke K. Ghosh, PHI Learni
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