Abstract: According to the Accounting Standards Board (ASB), the objective of financial statements is to provide financial information about three aspects of the reporting entity. The second of these is information about its financial performance. 2 To most users, this means a statement showing whether it has made a profit or a loss. Their understanding of the profit concept is probably similar to the Concise Oxford Dictionary’s definition of the term: . advantage, benefit, (). pecuniary gain, excess of returns over outlay, ( , for more than one paid to get it); The purpose of this chapter is to examine whether the existing accounting rules provide useful information about the financial performance of the reporting entity. At first glance, the Companies Act 1985 appears to be supportive of the user’s desire to find out whether the reporting entity has made a profit or a loss. It requires companies to draw up a profit and loss account using one of four prescribed formats. Format 1, the most commonly used format, specifies that the profit and loss account should consist of the following items (unless special circumstances require them to be adapted): 3
Publication Year: 1993
Publication Date: 1993-01-01
Language: en
Type: book-chapter
Indexed In: ['crossref']
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