Essay
BTEC - UNIT 6 - P2 - Explain how a limited company’s financial statements are influenced by the legal and regulatory framework.
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- PEARSON (PEARSON)
Achieved Triple Distinctions
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Explain the extent Marks and Spencer meets the international standardsExplain the extent Marks and Spencer meets the international standards. Here you should cover IAS1, IAS2,
IAS7, IAS16, IAS18 & IAS38.
IAS 1 – The Presentation of Final Account
The standard includes some specific information on the nature and format of the final
accounts–which is important because Marks and Spencer are trading across countries to
ensure that the consumers of the accounts are informed about what those accounts display.
Without such standardization, each country would view its accounts in different ways and
would be very difficult to understand and compare. The standard defines precisely what
should be included in the collection of financial statements:
· A balance sheet, clearly showing assets and liabilities
· An income profit statement
· A statement of any changes in equity
· A cash flow forecast
The framework includes a number of accounting principles and guidelines that should be observed in
the preparation of the financial statements.
· Fair presentation
· Accounting policies and disclosure
· Going concern
· Accrual basis of accounting
· Consistency of presentation
· Materiality
· Comparative information
IAS2 Inventories
Marks and Spencer inventories contain completed and partially finished products and raw materials.
The rule specifies that inventories should be priced at the purchase price, net realizable value or fair
value, whichever is lower. Net realizable value means sale rate, and fair value is what other investors
would have to pay for it. Normally, the cost at which Marks and spencer value their inventories
would be at the purchase price, as this would generally be the lowest of the three prices.
IAS7 Cash Flow Statements
The norm defines that the in and out cash flow of marks and spencer should be listed in the cash
flow statement.
· Operating
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