An Information Oriented Approach to the Presentation of Common Shareholders' Equity.

Abstract Recent researches' have emphasized that accounting exists to communicate in summary form those economic events affecting the reporting unit. Accounting is not an end in itself, but simply a method of bridging the gap between an economic unit, the entity, and some party or parties, either internal or external, who require information about these events. Thus, the utility of an accounting system is not derived from its elegance, but rather from its ability to communicate the relevant data. The idea that accounting is designed to report economic data to those groups desiring it is important for two reasons. First, and more basic, the accounting system ought to be designed to meet the informational needs which led to its creation. Second, the term economic data is used to denote data which are useful in decision-making and for control. The purpose of this paper is therefore, twofold. First is to stress the need for utilizing such an approach in accounting reports. Second, to illustrate how such an approach can be implemented in a specific instance, the presentation of common shareholders' equity on the balance sheet.