The Environment of Financial Accounting

As you have been taught in the earlier courses, accounting is the universal language of business
and is essentially characterized by identification, measurement, and communication of financial
information about economic entities to interested parties.

In this course, we are dealing with one of the specialized field of accounting i.e. intermediate
financial accounting.
Significant changes in the financial reporting environment are taking place, which hopefully will
lead to a single, widely accepted set of high-quality accounting standards. The major standard-
setters of the world, coupled with regulatory authorities, now recognize that capital formation
and investor understanding are enhanced if a single set of high-quality accounting standards is
developed.
Financial statements are the principal means through which a company communicates its
financial information to those outside the business. These statements provide a company’s
history quantified in money terms. The financial statements most frequently provided are (1) the
statement of financial position, (2) the income statement (or statement of comprehensive
income), (3) the statement of cash flows, and (4) the statement of changes in equity. Note
disclosures are an integral part of each financial statement.