Conceptual Framework and Ontology Technologies †MyAssignmenthelp

Question: Discuss about the Conceptual Framework and Ontology Technologies. Answer: Introduction This report aims to provide an adequate understanding of the conceptual accounting framework that is mainly developed by the IASB for providing a theoretical basis to accounting. In this context, the report has examined the compliance of the financial reports of conceptual accounting framework with the characteristics of the conceptual accounting framework of a selected business entity. The business entity selected for the evaluation purpose is Dominos Pizza, an American world-recognized chain of pizza restaurant having about 13,800 locations across the world. The company operates on a global level and therefore it is required by it to adopt the use of standardized accounting practices as provided by IASB for ensuring its successful growth in various countries of its operations. The conceptual accounting framework developed by the IASB has laid to the foundation and development of general purpose of financial disclosure of information by the business entities. The major objective of developing financial reports is to disclose sufficient financial information to the end-users of financial reports to guide them in their decision-making process. The end-users of the financial information are investors, creditors, lenders, buyers, financial analysts and other stakeholders of a business entity. As per the general objective of framework, Dominos Pizza have developed and disclosed all the relevant materialistic information about its financial performance in the financial review section of its annual report. The required financial information is disclosed through the preparation ad presentation of general purpose financial statements that are developed with the application of principle of consolidation (Dominos Pizza: Annual Report, 2016). The company discloses its financial information in an integrated manner comprising the performance of its various subsidiaries. This enables the investors to gain an overview of the performance of the company in an integrated manner that guides them in taking accurate investment decisions by analyzing the financial growth prospects of the company as a single economic entity. It has developed and disclosed effectively all the general purpose financial statements as per the IASB standards that are, cash flows balance sheet, income statement, equity and cash flow statement (Dominos Pizza: Annual Report, 2016). The relevant accounting principles and rules applied for the preparation of the financial statements are also disclosed in the notes to the financial statement section that has provided a relative brief summary of the accounting policies (Psaros and Trotman, 2004). The review of the financial reports of Dominos Pizza assures that it has disclosed all the materialistic facts and information for meeting the different needs of the target audience. The financial statement developed in a consolidated manner has provided all the required information about the different financial elements such as assets, liabilities and equity. This helps the target audience to gain an overview of the capital structure of the company and the proportion of assets, liabilities and equity. The target audience needs to gain an overview of the proportion of current assets in relation to the current liabilities for assessing its future growth prospects. Also, the analysis of proportion of debt and equity is essential for investors to determine the financial leverage on the company. This can be calculated through the use of current and debt ratio by using the value of financial elements. The current and debt ratio of the company for the year 2016 is calculated through the us e of following formula: Therefore, it can be stated that company is not at present in good financial position as it is having stockholder deficit as analyzed from its financial reports (Dominos Pizza: Annual Report, 2016). Also, the information about the income and expenditure can be gained through the use of income statement that also predicts its future financial growth (McDaniel, Martin and Maines, 2002). Criteria of Recognition of Financial Elements in Dominos Pizza The notes to financial statements section of the company has stated the information in relation to the criteria of recognition used for different financial elements. The financial elements that are able to provide future economic benefit to the company are only recognized such as assets, liabilities, income and expenses (Mazhambe, 2014). The revenue is recognized for the retail sales realized from its franchised stores and is measured at a percentage of retail sales as stated in the franchise agreement. The long-term and intangible assets are recognized at cost and the financial liabilities and income tax are also recognized through the use of historical cost method (Dominos Pizza: Annual Report, 2016). The fundamental characteristics of financial reporting are relevance and faithful presentation of information. Dominos Pizza as per relevant characteristics has provided realistic information having a confirmatory value and a predictive value based on use of accounting estimates and assumptions. The confirmatory value of different financial elements is presented in the financial statements and the relevant accounting practices used in their preparation are also disclosed in the financial report. The predictive value is used for those financial elements whose value is calculated by the use of some accounting estimates and assumptions (Maines and Wahlen, 2006). The company has also faithfully presented financial information by ensuring that it is complete, neutral and error-free as stated by carrying out auditing of the financial statements in accordance with the Public Company Accounting Oversight Board. This is done to assure that financial statements are free from materialistic erro r and therefore have faithful presentation (Dominos Pizza: Annual Report, 2016). Enhancing Characteristics of Financial Reporting Complied by Dominos Pizza The enhancing characteristics of financial information are that it should be verifiable, understandable, comparable and timely (Gerber and Van der Merwe, 2014). Dominos Pizza has disclosed sufficient quantitative information in the financial reports and the method used for the calculation to verify the value of financial elements. It is also understandable as notes section has provided the detail about the accounting principle used for developing financial reports. Also, it is comparable as the financial information in the consolidated financial statement of the current year can be compared with that of the previous year to reflect the percentage increase or decrease. At last, the financial information is also disclosed in a timely manner that is on an annual basis to ensure that investors utilize the current information for decision-making (Dominos Pizza: Annual Report, 2016). Recommendations It is recommended to the company on the basis of the overall evaluation of its financial report that it should present a systematic flow of information. The financial report of the company is a bit complex to be easily understood by the end-users who lack sufficient financial information. Thus, the report need to be more synchronized with systematic flow of information so that readers cane easily analyzes the overall financial position of the company. Conclusion It can be stated from the overall discussion held in the report that Dominos Pizza is complying with conceptual accounting framework effectively. Although, it need to make certain changes like developing it in a easy format to meet the varying interests of the end-users. References Dominos Pizza: Annual Report 2016. 2016. [Online]. Available at: file:///C:/Users/Prashant/Desktop/2016_Annual_Report_DPZ.pdf [Accessed on: 17 April 2018]. Gerber, M. C., Gerber, A. J., and Van der Merwe, A. J. 2014. An Analysis of Fundamental Concepts in the Conceptual Framework Using Ontology Technologies. South African Journal of Economic Management Sciences 17 (4), pp. 396411. Gore, R., and Zimmerman, D. 2007. Building the Foundations of Financial Reporting: The Conceptual Framework. The CPA Journal 77(8), pp. 3034. Maines, L. and Wahlen, J. 2006. The Nature of Accounting Information Reliability: Inferences from Archival and Experimental Research. Accounting Horizons 20(4), pp. 399- 425. Mazhambe, Z. 2014. Review of International Accounting Standards Board (IASB) Proposed New Conceptual Framework.Journal of Modern Accounting and Auditing10 (8), pp. 835-845. McDaniel, L., Martin, R. and Maines, L. 2002. Evaluating Financial Reporting Quality: the Effects of Financial Expertise vs. Financial Literacy. The Accounting Review 77, pp.139-167. Psaros, J. and Trotman, K. 2004. The Impact of the Type of Accounting Standards on Preparers Judgments. Abacus 40(1), pp. 76-93.