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Journal of Applied Sciences

Year: 2013 | Volume: 13 | Issue: 13 | Page No.: 2505-2511
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Authors

Zhang Yongkui

Keywords

Research Article

Limitations of Financial Statements and Disclosure of Core Information

Zhang Yongkui
There are at least two limitations related to current financial statements that have been widely explored. First, financial statements typically only reflect the results of value creation instead of the process of value creation. Secondly, financial statements mainly reports information about tangible assets and financial assets while information about intangible assets is not fully reflected in them. With the rise of knowledge-based economy, the usefulness of financial reporting is gradually abating for lack of information about the process of value creation and intangible assets. How to increase the usefulness of financial reporting? Extant literature mainly centers on reflecting the process of value creation and intangible assets in financial statements but I believe that it is more feasible to reflect these information in off-sheet reports, therefore, in order to compensate the limitation of financial statements, an important task of disclosure is to provide sufficient information about the process of value creation and the intangible resources of enterprises which the study calls “core information”. Then the study puts forward disclosure principles and disclosure framework of core information.
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