Abstract:
The act of classifying information created by accounting practices is ubiquitous in the accounting process ; from recording to reporting, it has almost become second nature. The classification has to correspond to the requirements and demands of the changing environment in which it is practised. Evidence suggests that the current classification of items in financial statements is not keeping pace with the needs of users and the new financial constructs generated by the industry. This study addresses the issue of classification in two ways : by means of a critical analysis of classification theory and practices and by means of a questionnaire that was developed and sent to compilers and users of financial statements. A new classification framework for accounting information in the balance sheet and income statement is proposed.
