Flashcards
1.1 Financial Statements
Cards in this deck (25)
- 1What is financial reporting? (3)Process of identifying, measuring and communicating economic information to others (1) so that they can make decisions on the basis of the information (1) and asses the stewardship of the entity's management (1).
- 2What are the three aspects of financial reporting? (3)1. Recording transaction undertaken by a business entity
2. Grouping similar transactions together which are appropriate to the business
3. Presenting periodic results - 3What is the purpose of management/internal reporting? (2)Reporting for the use of the management of a business itself (1) can be tailored to management's own needs and provided at whatever frequency and detail appropriate (1)
- 4Where are the general principles relating to financial reporting set out? (1)IASB Conceptual Framework for Financial Reporting (Conceptual Framework) (1)
- 5Under IFRS, what is a complete set of financial statements comprised of? (5)1. SOFP
2. Statement of profit or loss and other comprehensive income (or two seperately)
3. Statement of changes in equity
4. Statement of cash flows
5. Notes to the financial statements - 6What is included in the notes to the financial statements? (3)1. Accounting policies, i.e. the specific principles, conventions rules and practices applied in order to reflect the effects of transactions and other events in the financial statements.
2. Detailed financial and narrative information supporting the information in the primary financial statements.
3. Other information not reflected in the financial statements, but which is important to users making their assesments - 7Which companies are required by law to produce financial statements? (1)Limited liability companies (1)
- 8Worldwide, the form and content of financial statements is regulated by ... ? (2)1. Primarily national legislation
2. The Financial Reporting Standards - 9Which laws must all UK companies comply with? (1)Companies Act 2006 (CA 2006) (1)
- 10What are the implication of CA2006? (3)1. Every UK registered company is required to prepare financial statements which give a true and fair view (1)
The individual (and some group) financial statements may be prepared:
- In accordance with the CA2006 (as regards format and additional information provided by way of notes) (1)
- In accordance with international accounting standards (1) - 11What are the three rules regarding for filing deadlines under CA2006? (3)1. Private companies: nine months after financial year end
2. Public companies: Six months after financial year end
3. Listed companies within four months of financial year end - 12What are the three Financial Reporting Standards and other professional guidance in the UK? (3)1. Accounting standards
2. Financial Reporting Standards for Smaller Entities (FRSSE)
3. International Financial Reporting Standards - 13What are the two UK accounting standards for the preparation of financial statements? (2)FRS 102: The Financial Reporting Standard Applicable in the UK and Republic of Ireland (1)
FRS 101: Reduced Disclosure Framework (1) - 14What is the FRSSE? (1)The Financial Reporting Standard for Smaller Entities: Brings together all the accounting standards to which UK small companies are required to follow in drawing up their financial statements (1)
- 15What is IFRS? (1)International Financial Reporting Standards Issued by the International Accounting Standards Board (IASB) (1)
- 16Which UK companies must comply with IFRS? (1)UK companies whose securities are traded in a regulated public market, eg the London Stock Exchange, must prepare their group accounts in accordance with IFRS (1)
- 17Which companies are exempt from the Financial Reporting Standards? (1)Unincorporated entities (1)
- 18What does UK Generally Accepted Accounting Practice (GAAP) mean? (4)Refers to all the rules, from whatever source, which govern UK accounting (1). This is seen as:
- Company Law (CA2006) (1)
- Accounting Standards (1)
- Stock exchange requirements (1) - 19Explain IAS 1 (4)- IAS 1 Presentaiton of Financial Statements (1)
- Requires financial statements to 'present fairly' the financial position and performance of an entity (1)
- States that departures from International Standards are only allowed in extremely rare cases (1) where compliance with IFRS would be misleading as to conflict with the objectives of financial statements as set out in the conceptual framework (1) - 20What is the UK overriding Companies Act Requirement? (1)Financial statements should present a 'true and fair view' (1)
- 21How is truth defined in relation to presentation of financial statements? (1)An objective concept reflecting factual accuracy within the bounds of materiality (1)
- 22What does 'fairness' mean in relation to financial statement preperation? (1)The view given is objective and unbiased (1)
- 23How is 'true and fair view' defined in terms of GAAP? (3)1. Compliance with accounting standards
2. Adherence to the requirements of CA2006
3. In the absence of more specific requirements, application of general accounting principles and fundamental concepts and, where appropriate, adherence to accepted industry practices. - 24Describe the 'true and fair view' override of CA2006 (3)1. Where compliance with its accounting views would not lead to a true and fair view, those rules should be departed from to the extent necessary to give a true and fair view
2. For any override, the Act requires disclosure of the particulars of the departure, the reason for it, and the financial effect.
3. Where compliance with its disclosure requirements are insufficient to give a true and fair view, additional information should be provided such that a true and fair view is provided - 25Compare UK GAAP and IFRS (3)1 .As IS are intended to operate in all legal environments, they cannot provide departure from legal requirements in any particular country.
2. In effect, UK companies applying IFRS cannot take advantage of the 'true and fair' override
3. Companies reporting under FRS 101 or FRS 102 are however reporting under Companies Act, so the true and fair override is still available to them
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- ACA Financial Accounting & Reporting (Reporting Framework & Ethics) Flashcards on 1.1 Financial Statements, created by Ed Blocksidge on 23/12/2014.
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- Ed Blocksidge
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