Flashcards
The Frameworks
Cards in this deck (22)
- 1Conceptual FrameworkThe Conceptual Framework is produced by the IASB (International Accounting Standards Board)
- 2Conceptual Framework Elements of Financial Statements ASSETSAn asset is a resource controlled by an entity as a result of past events and from which future economic benefits are expected to flow to the entity.
- 3Conceptual Framework Elements of Financial Statements LIABILITIESA liability is a present liability of the entity arising from past events, the settlement of which is expected to outflow from the entity of resources embodying economic benefits
- 4Conceptual Framework Elements of Financial Statements EQUITYEquity is the residual interest in the assets of an entity after deducting all of its liabilities.
EQUITY=NET ASSETS= SHARE CAPITAL + RESERVES - 5Conceptual Framework Elements of Financial Statements INCOMEIncome is the increase of economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities, (that result in increases of equity- other than those relating to contributions from equity participants)
- 6Conceptual Framework Elements of Financial Statements EXPENSESExpenses are decreases in economic benefits using the accounting period in the form of outflows or depletions or assets or increases of liabilities (that result in decreases of equity- other than those relating to distributions of equity participants )
- 7Conceptual Framework Underlying Assumption GOING CONCERNFS are prepared on the basis that an entity will continue in operation for the foreseeable future, assuming that it neither intends to liquidate or curtail materially the scale of its operations. If such intention exist FS are prepared on a different basis which is disclosed
- 8Conceptual Framework FUNDAMENTAL Qualitative Characteristics RELEVANCERelevant information is capable of making a difference in decisions made by users (Predictive or confirmatory Value)
Information is material if omitting or misstating information could influence user's decisions - 9Conceptual Framework FUNDAMENTAL Qualitative Characteristics FAITHFUL REPRESENTATIONInformation that is complete, neutral and free from error
- 10Conceptual Framework ENHANCING Qualitative Characteristics COMPARABILITYConsistent information that can be compared with similar information from other entities or from other periods
- 11Conceptual Framework ENHANCING Qualitative Characteristics VERIFIABILITYAssures users that the information faithfully represents the economic phenomenon it purports to represent
- 12Conceptual Framework ENHANCING Qualitative Characteristics TIMELINESSHaving information available to decision makers in time to be capable of influencing their decisions
- 13Conceptual Framework ENHANCING Qualitative Characteristics UNDERSTANDABILITYClassifying, characterising and presenting information clearly and concisely
- 14Accounting Standards Companies Act 2006Provisions relating to formation, governance and administration of a company
GAAP-National Accounting Procedures, Generally Accepted Accounting Procedures
IAS's- International Accounting Standards
IFRS's- International Financial Reporting Standards - 15Accounting Standards Purpose of Accounting Standards CREDIBILITYEnsures Financial reports give a true and fair view of the company
- 16Accounting Standards Purpose of Accounting Standards COMPARABILITYBy having FS prepared on a consistent basis, inter company comparisons can be made
- 17Accounting Standards Purpose of Accounting Standards DISCIPLINEDetails on how transactions are recognised meaning less scope for manipulation, directors must ensure that FS give a true and fair view rather than presenting the company in a favourable view
- 18Measurement basis HISTORICAL COSTMeasured at the amount paid ON TRANSACTION DATE
- 19Measurement Basis REALISABLE VALUEMeasured at the amount that could be obtained if that asset was sold or liability released TODAY
- 20Measurement Basis CURRENT COSTMeasured at amount that would be paid if transaction occurred TODAY
- 21Measurement Basis PRESENT VALUEMeasured at the discounted value of future cash flows
- 22ACCOUNTING EQUATIONASSETS= EQUITY + LIABILITIES
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- AAT LEVEL 4 Financial Statements, THE FRAMEWORKS ,REVISION FLASH CARDS
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- Gemma Doney
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