What is recording and reporting in practice of accounting

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A recent graduate Bob, struggled to find work as an Accountant. He was then recruited as a bookkeeper of Magano Ltd. He is currently occupied with finalizing the financial statements for the end period 31 May 2019 and reported to face the following challenges: A transaction, material in value, took place during the year and has the potential impact on the economic decisions of the users of Magano's Ltd financial statements, both currently and potentially in the future. It is projected that the transaction is likely to be finalised towards the last quarter of the next financial year. The precise details of the transaction is not available at the present moment. Hence, Mr. Bob is capable of providing reliable estimations of figures related to this transaction. The following possible options are to be considered by Mr. Bob: a) Postponing the issuance of the 31 May 2019 financial statements until the transaction is finalised, or b) Put in use his judgment and making estimations of the figures related to this transaction that need to be included in the 31 May 2019 financial statements. Moreover, the act of selecting option 1 (one) will give an impression that the financial statements for the 2019 financial year may be issued one year late. However, choosing option 2 (two) means the 2019 financial statements will only comprise of estimations and not exact information. As a student for financial accounting at UNAM, he requested that you assist him in making informative decisions.

You are required to:

Problem 1. Advise Mr. Bob, by providing a comprehensive discussion basing it on the foundation and enhancing qualitative characteristics of useful financial information as stipulated in the Conceptual Framework for Financial Reporting. Furthermore, it is to be noted that with reference to the Conceptual Framework for Financial Reporting, illustrate to him which of the two options are viable.

Problem 2. Briefly discuss what you consider to be the difference between recording and reporting in practice of accounting.

Reference no: EM132623668

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