Question

You are a senior accountant of Ramona Enterprises Limited. What three steps would you take to make
your company’s financial statements understandable and decision useful?
$1. \hrule$
$2. \hrule$
$3. \hrule$
[Hint : Refer to qualitative characteristics of accounting information]

Answer 1

Answer:

I will computerised the accounting

I will enter all transaction properly

Explanation:

Answer 2

The answer is stated below:

Explanation:

• Financial statements are the statements which are the reports made through the management of the company in order to present the financial position as well as performance at point of time or period.
• The financial statements comprise of statement of cash flows,  balance sheet, statement of owner's equity and income statement.
• The steps required to make the financial statement of the company decision and understandable, needs to follow:

1. Relevance - This step states that the financial statement is relevant to the user, which in turn means timeliness.
2. Understandability as well as comparability - This step states the financial statement should be prepared in way that it is easy to understand and could be compare with others.
3. Reliability - This step states that the financial statement should possess the neutrality, verifiability as well as faithfulness.

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