3585606
Description
Flashcards by Gemma Doney, updated more than 1 year ago
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Created by Gemma Doney
over 8 years ago
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| Question | Answer |
| Conceptual Framework | The Conceptual Framework is produced by the IASB (International Accounting Standards Board) |
| Conceptual Framework Elements of Financial Statements ASSETS | An 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. |
| Conceptual Framework Elements of Financial Statements LIABILITIES | A 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 |
| Conceptual Framework Elements of Financial Statements EQUITY | Equity is the residual interest in the assets of an entity after deducting all of its liabilities. EQUITY=NET ASSETS= SHARE CAPITAL + RESERVES |
| Conceptual Framework Elements of Financial Statements INCOME | Income 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) |
| Conceptual Framework Elements of Financial Statements EXPENSES | Expenses 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 ) |
| Conceptual Framework Underlying Assumption GOING CONCERN | FS 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 |
| Conceptual Framework FUNDAMENTAL Qualitative Characteristics RELEVANCE | Relevant 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 |
| Conceptual Framework FUNDAMENTAL Qualitative Characteristics FAITHFUL REPRESENTATION | Information that is complete, neutral and free from error |
| Conceptual Framework ENHANCING Qualitative Characteristics COMPARABILITY | Consistent information that can be compared with similar information from other entities or from other periods |
| Conceptual Framework ENHANCING Qualitative Characteristics VERIFIABILITY | Assures users that the information faithfully represents the economic phenomenon it purports to represent |
| Conceptual Framework ENHANCING Qualitative Characteristics TIMELINESS | Having information available to decision makers in time to be capable of influencing their decisions |
| Conceptual Framework ENHANCING Qualitative Characteristics UNDERSTANDABILITY | Classifying, characterising and presenting information clearly and concisely |
| Accounting Standards Companies Act 2006 | Provisions 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 |
| Accounting Standards Purpose of Accounting Standards CREDIBILITY | Ensures Financial reports give a true and fair view of the company |
| Accounting Standards Purpose of Accounting Standards COMPARABILITY | By having FS prepared on a consistent basis, inter company comparisons can be made |
| Accounting Standards Purpose of Accounting Standards DISCIPLINE | Details 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 |
| Measurement basis HISTORICAL COST | Measured at the amount paid ON TRANSACTION DATE |
| Measurement Basis REALISABLE VALUE | Measured at the amount that could be obtained if that asset was sold or liability released TODAY |
| Measurement Basis CURRENT COST | Measured at amount that would be paid if transaction occurred TODAY |
| Measurement Basis PRESENT VALUE | Measured at the discounted value of future cash flows |
| ACCOUNTING EQUATION | ASSETS= EQUITY + LIABILITIES |
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