Page 150 - DCOM409_CONTEMPORARY_ACCOUNTING

Unit 12: Analysis of Financial Reporting Framework

Workers efficiency report, Notes
Daily production report,
Workers utilization report and

Scrap report
Overtime report
Material spoilage report
Accident report etc.

Self Assessment

Fill in the blanks:

1. ……….. is the essence of the management information system.
2. Report is a statement containing facts and if they contain accounting information and data
they are called ………….

3. At lower level foremen and supervisors are concerned at the floor and they prepare their
reports ………… without any expert opinion.
4. The communication of the information between two or more parties through reports is
known as ………….
5. It can be assumed that top level of the business only needs reports for …………….control.
6. The reports at ………….. level should show the efficiency and cost data relating to different
departments.

12.2 Strengths and Weakness of Accounting Framework

Accounting reports consist of financial statistics. Management cannot analyse all significant
facts regarding its business especially in case of large scale production where the business
operations are more complex in nature. Accounting reports helps to get full information about
the entire operative activity of the firm.
The key strengths and weakness of accounting framework can be describes as follows:

12.2.1 Strengths of Accounting Framework

The following are the key strengths of a accounting framework:
1. Providing accounting information: Accounting reports consist of financial statistics.
Management may not analyse all significant facts regarding its business operations
especially in case of large scale production where the business operations are more complex
in nature. Accounting reports help to get full information about its entire operative activity
of the firm. Thus important objective of the reporting is to provide accounting information
to operating and top level management in accurate form in understandable brief manner.
2. To take right decision: To help the management in taking the right decisions with suitable
statements provided by the management accountant.
3. Acceptability of the decision by all: Reporting leads to motivate people, increases efficiency
and boosting the morale of the people engaged in the various aspects of the work of the
enterprise.

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