Help Please And if you can include a citation thank you In t

Help Please! And if you can include a citation thank you.

In the study of accounting it is important to have the necessary skills to use electronic libraries and databases for research purposes. Professional Research Students will complete the \"Bridge to the Profession: Professional Research\" case scenario found on p. 77 of the Wiley text. Students will submit a written Assignment addressing the required prompts. Case Scenario Your aunt recently received the annual report for a company in which she has invested. The report notes that the statements have been prepared in accordance with \"generally accepted accounting principles.\" She has also heard that certain terms have special meanings in accounting relative to everyday use. She would like you to explain the meaning of the terms she has come across related to accounting. Go to http://www.fasb.orq and access the FASB Concepts Statements and respond to the following tems. (Provide paragraph citations.) When you have accessed the documents, you can use the search tool in your Internet browser a) How is \"materiality\" defined in the conceptual framework? b) The concepts statements provide several examples in which specific quantitative materiality guidelines are provided to firms. Identify at least two of these examples. Do you think materiality guidelines should be quantified? Why or why not? c) The concepts statements discuss the concept of \"articulation\" between financial statement elements. Briefly summarize the meaning of this term and how it relates to an entity\'s financial statements

Solution

How is “materiality” defined in the conceptual framework??

Materiality is one of the important basic concept of the accounting. It helps to identify the various element of the accounts which play a direct role to compute the accounting profit. The material item should be considered at the time of calculating the accounting profit or taking accounting decision.

Let explain the same with an example. Suppose we need to compute the accounting profit for the financial year. So in that case the items which will be considered at the time of calculating the accounting profit are those which are related with that particular financial year. Suppose the financial item is prepared on the basis of the accrual basis. So if the expenditure paid this year but the expenditure is related with other financial year in that case the item is not consider as material for that particular financial year.

Provide two examples of quantitative materiality guidelines and discuss whether or not the guidelines should be quantified??

The two examples of the quantitative materiality are:

The consistency in the percentage of various result should be quantified i.e. it should be measured and analysis properly. Let discuss the same with an example. The Gross profit Turnover ratio should be calculated by considering the gross profit and the total turnover. The turnover and the gross profit must be quantified otherwise it’s difficult to measure and maintain the consistency between this ratio.

The other example of the materiality in the quantitative manner is at the time of applying various accounting standard. As per the GAAP and IFRS there are various standards which must be incorporated in the financial statement. So to identify the standards which are material for the business and which should be incorporated is a challenging task. So from that point of view the materiality is important and also it should be quantitative.

Summarize the meaning of “articulation” and how it relates to financial statements:

The “articulation” means distribution. The term very much relevant for the financial statement. The financial statement is a whole cycle which starts with Journal Entries and Ended up with Balance sheet. Each of the stage of the accounting cycle is related with each other. The data is articulated among the various stages of the accounting cycle. Though each stage of accounting is related with each other so articulation has an important role in the financial statement. To understand the financial statement properly and to understand the changes of the financial position it is very much important. So it can be said that for analysis the financial statement and to take various economic decision, articulation has an important role.

References

Quantitative guidelines: guidance based on professional pronouncements. (Accounting). (2018). Archives.cpajournal.com. Retrieved 22 January 2018, from http://archives.cpajournal.com/old/14038930.htm