Manage finances ( BSBFIM601) Assessment Task 1: Assignment Plan for financial management Question- 1: a) Explain in one paragraph what is the purpose of the conservatism? Basically conservatism term in accounting refers to the policy of anticipating possible future losses, which allows accounts to be fair and objective until multiple outcomes are possible. Main purpose of conservatism is to conform revenue and assets are not overstated and liabilities and cost are not understated

. b) Take time to explore the AASB’s website at www.aasb.gov.au and the two key accounting that are directly relevant to gathering revenue data for statutory recording and reporting, please explain in a paragraph? Regarding to the resource of AASB we can figure out two most important key accounting terms; Presentation of Financial Statements and Revenue, which is straightforwardly applicable in gathering revenue data for establishing statuary recording and reporting. Firstly, presentation of financial statement Standard counsels the basis for presentation of general-purpose financial statements to ensure comparability both with the entity’s financial statements of previous periods and with the financial statements of other entities. It sets out overall requirements for the presentation of financial statements, guidelines for their structure and minimum requirements for their content. Secondly, AASB introduces the revenue which includes only the gross inflows of economic benefits received and receivable by the entity on its own account. According to AASB revenue is an amounts collected on behalf of third parties such as sales taxes, goods and services taxes and value added taxes are not economic benefits which flow to the entity and do not result in increases in equity. Therefore, they are excluded from revenue. Similarly, in an agency relationship, the gross inflows of economic benefits include amounts collected on behalf of the principal and which do not result in increases in equity for the entity. The amounts collected on behalf of the principal are not revenue. Instead, revenue is the amount of commission. Analysing those two accounting terms, we can say that both Presentation of financial statements and revenue are vital for establishing statuary recording and reporting