Financial reporting is the valuing, recording, classifying, summarizing and reporting of economic transactions and events of the three basic economic items in terms of an unstable depreciating functional currency during all levels of inflation and an unstable appreciating functional currency during deflation.
The three fundamentally different basic economic items in the economy, namely, monetary items, variable items and constant items, have economic values expressed in terms of unstable money; i.e. the unstable monetary unit of account. Economic transactions and events involving these three basic economic items are accounted in an organized manner when a double entry accounting model is implemented: journal entries, general ledger accounts, trial balances, cash flow statements, income and expenses in the income statement, assets and liabilities in the statement of financial position plus other financial, management and costing reports.
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