Flashcards
Topic 1
Cards in this deck (30)
- 1Identifying-Transactions and events that relate to a company.
- 2Measuring-...and recording these transactions in the accounting system.
- 3Communicating-The information in a clear and meaningful format for users.
- 4Types of users and examples-INTERNAL- CEO, CFO, marketing managers etc
EXTERNAL- Banks, shareholders, low level employees, tax authorities (ATO) - 5Financial accountingPreparation and presentation of accounting information for all types of users, typically focuses on past events and is released in the format of GPFS such as the income statement. These types of statements can be accessed by both internal and external users.
- 6Management accountingthe preparation on financial information regarding a company that is available to internal users for decision making. This is generally unregulated and focuses on current values and can make predictions about the future. This type of accounting an the quickly prepared reports that it provides are generally only available to internal users.
They formulate plans and budgets and provide information that is to be used in the monitoring and control of different parts of the entity. They can be prepared at an time. - 7AmortisationVery similar to depreciation however it tends to be used for the write off of intangible assets (goodwill)
Either depreciation or amortisation is used for the write off of fixed capital. - 8Income statement-Includes-
* Income
*Costs/expenses
Overall profits from income - 9Balance sheet-Includes-
*Assets
*liabilities
Gives us the equity - 10Statement of cash flowsIncludes-
*Cash inflows les cash outflow
Separated into three main sections
Operations
Investment
Financing
Gives cash at bank values and compares this to the cash at bank during the past reporting period. - 11Statement in changes of equity??
- 12Conceptual frameworkthe WHO, WHAT and WHY of financial reporting. Directly related to financial reports that must be supplied to.
While accounting standard tell us how to define elements and record information, the conceptual framework tells us what must be included in general purpose financial statments - 13Qualitative CharacteristicsFUNDEMENTAL-
* Relevance
*Faithful representation
ENHANCING-
* Comparability
* Timeliness
* Verifability
*Understandability
All have to be fulfilled for them to be included in the financial statement for sure. If the Fundamental Characteristics are not included the element can be included as a note if one or more of the enhancing characteristics are not included 'Details may appear in the annual report'. - 14The Elements!Assets
Liabilities
Owners Equity
Income
Expenses
FIVE!! - 15Accounting equation/sE=A-L
E= - 16RelevanceInformation should be Predictive and have confirmatory value. This is for users trying to make economic decisions.
- 17Faithful representationInformation 'Faithfully represents' the financial information the it purports to.
Information should be complete, free from error and neutral. - 18ComparitabilityReports are to be presented in similar forms to reports from other entities in the same industry. Reports from a given company will also not change much from period to period. This mean this the report can be prepared to one another.
- 19UnderstandabilityThese reports should be presented to users in the most understandable manner without sacrificing relevance or reliability
- 20TimlinessAccounting reports will be provided to the public within three months of the end of the financial year.
- 21AssetResources CONTROLLED by an entity as a result of a PAST event that will likely in an INFLOW in economic benefit.
- 22LiabilitiesPRESENT OBLIGATIONS of an entity arising from PAST EVENTS that will likely result in an OUTFLOW in economic benefits.
- 23Owners EquityThe residual interest in the assets of an entity after subtracting the liabilities of the entity.
- 24IncomeAn INCREASE in economic benefits as a result of INFLOWS OF ASSETS or DECREASES OF LIABILITIES that will result in an increase in equity.
(No equity contributions) - 25ExpensesDECREASE in economic benefits as a result of a OUTFLOWS OF ASSETS of INCURRENCES OF LIABILITIES that will result in a DECREASE IN EQUITY
(No drawings) - 26Recognition criteriaMust fulfil the elemental definition as well as BOTH of probable occurrence and Reliable measurement
- 27Probable occurance>50% chance of occurring
- 28Reliable measurementMust have a cost or value that can be reliably measured
common sense really - 29Steps to applying the definition and recognition criteria...
- 30Conceptual framework VS Accounting standardsCONCEPTUAL FRAMEWORK provides foundations on which to base accounting standards while the accounting standards are developed to deal with more specific issues.
(look at the slide)
Information
- Description
- University ACC1200 Flashcards on Topic 1, created by Finn Cole-Adams on 09/06/2016.
- Created by
- Finn Cole-Adams
- Views
- 0
- Rating