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Flashcards

Financial statements, depreciation and accounting concepts

emma.botica Inglês 42 flashcards

Flashcards do conjunto (42)

  1. 1PURPOSE OF A CASHFLOW STATEMENTTO REPORT WHERE THE MONEY WAS RECEIVED FROM AND WHAT THE MONEY WAS SPENT ON DURING THE PERIOD. IT SHOWS THE CHANGES IN THE BANK BALANCE FOR THE PERIOD.
  2. 2LIMITATIONS OF THE CASHFLOW STATEMENT-DOES NOT SHOW CREDIT TRANSACTIONS OR NON-CASH ITEMS (E.G. DEPRECIATION).
    -ONLY SHOWS PAST CASH RECEIPTS AND PAYMENTS AND DOES NOT SHOW CURRENT CASH OBLIGATIONS.
  3. 3STRAIGHT-LINE DEPRECIATION DESCRIPTIONTHE DEPRECIATION AMOUNT IS THE SAME EVERY YEAR.
  4. 4WHEN TO USE THE STRAIGHT-LINE DEPRECIATION METHOD.WHEN THE LOSS IN ECONOMIC VALUE OF THE ASSET IS CONSISTANT OVER TIME.
  5. 5DIMINISHING VALUE DEPRECIATION DESCRIPTIONTHE DEPRECIATION AMOUNT DECREASES EVERY YEAR.
  6. 6WHEN TO USE THE DIMINISHING VALUE METHODWHEN THE LOSS OF THE ECONOMIC VALUE OF THE ASSET IS GREATEST IN ITS EARLIEST YEARS.
  7. 7UNITS OF USE DEPRECIATION DESCRIPTIONTHE DEPRECIATION AMOUNT DEPENDS ON HOW MUCH THE ASSET IS USED DURING THE PERIOD.
  8. 8WHEN TO USE THE UNITS OF USE DEPRECIATION METHODWHEN THE LOSS OF ECONOMIC VALUE OF THE ASSET IS IN RELATION TO HOW MUCH IT IS USED.
  9. 9CAPITAL EXPENDITURE-IT PROVIDES ECONOMIC BENEFIT TO THE BUSINESS BEYOND THE CURRENT YEAR.
    -INCREASES ASSTES AND DOES NOT AFFECT EQUITY.
  10. 10REVENUE EXPENDITURE-IT ONLY BENEFITS THE BUSINESS FOR THE CURRENT YEAR.
    -REVENUE EXPENDITURE IS AN EXPENSE AND IT DECREASES EQUITY.
  11. 11RECOGNITION CRITERIAL OF A LIABILTY-IT IS PROBABLE THAT AN OUTFLOW OF RESOURCES EMBODYING ECONOMIC BENEFITS WILL RESULT.
    -IF THE LIABILITIES COST CAN BE MEASURED WITH RELIABILITY.
  12. 12CHARACTERISTICS OF AN ASSET-PAST TRANSACTION
    -PRESENT CONTROL
    -WILL PROVIDE FUTURE ECONOMIC BENEFIT.
  13. 13RECOGNITION CRITERIA OF AN ASSET-IT IS PROBABLE THAT FUTURE ECONOMIC BENEFIT WILL FLOW TO THE ENTITY.
    -IF THE ASSET'S COST CAN BE MEASURED WITH RELIABILTY.
  14. 14CHARACTERISTICS OF A LIABILITY-PAST TRANSACTION
    -PRESENT OBLIGATION
    -FUTURE OUTFLOW OF RESOURCES EMBODYING ECONOMIC BENEFIT.
  15. 15CHARACTERISTICS OF INCOME-INCREASES IN ECONOMIC BENEFIT-EITHER AS AN INCREASE IN ASSETS OR A DECREASE IN LIABILITIES.
    -WHICH INCREASES EQUITY.
    -BUT IS NOT AN OWNERS CONTRIBUTION.
  16. 16RECOGNITION CRITETRIA OF INCOME-AN INCREASE IN FUTURE ECONOMIC BENEFIT (INCREASE IN ASSTES OF DECREASE IN LIABILITIES) IS PROBABLY AND CAN BE MEASURED WITH RELIABLITY.
  17. 17CHARACTERISTICS OF AN EXPENSE-DECREASES IN ECONOMIC BENIFITS-EITHER AS A DECREASE IN ASSETS OR INCREASE IN LIABILTIES.
    -WHICH DECREASES EQUITY.
    -BUT IS NOT DRAWINGS.
  18. 18RECOGNITION CRITERIA OF AN EXPENSE-
  19. 19LIMITATIONS OF AN INCOME STATEMENT-DEPRECIATION AND DOUBTFUL DEBTS IS BASED ON ESTIMATES-PROFIT MAY BE INACCURATE.
    -INVENTORY VALUATION MIGHT BE INACCURATE RESULTING IN AN INACCURATE PROFIT-COGS INACCURATE.
    -DOES NOT INCLUDE NON-FINANCIAL INFORMATION
  20. 20PURPOSE OF AN INCOME STATEMENTTO CALCULATE THE PROFIT (OR LOSS) FOR THE PERIOD BY CALCULATING INCOME AND EXPENSES.
  21. 21PURPOSE OF THE STATEMENT OF FINANCIAL POSITIONTO SHOW THE FINANCIAL POSITION OF THE BUSINESS AT A POINT IN TIME BY SHOWING THE ASSETS, LIABILITIES AND EQUITY OF THE ENTITY ON BALANCE DAY.
  22. 22LIMITATIONS OF THE STATEMENT OF FINANCIAL POSITION-ACCUMULATED DEP. BASED ON ESTIMATES- ASSET VALUE MAY BE INACCURATE.
    -ALLOWANCE FOR DD IS BASED ON ESTIMATE SO AR AMOUNT MAY BE INACCURATE.
    -DOES NOT INCLUDE NON-FINANCIAL INFO E.G. AGE OF ASSET
    -ASSETS BASED ON HC WHICH MAY NOT REFLECT THE CURRENT MARKET VALUE OF THE ASSETS.
  23. 23DEFINITION OF RELEVANEINFORMATION HAS THE QUALITY OF RELEVANCE WHEN OT INFLUENCES THE ECONOMIC DECISIONS OF USERS-BY HELPING USERS TO EVALUATE PRESENT/FUTURE EVENTS OR TO CONFIRM/CORRECT THEIR PAST EVALUATIONS.
  24. 24APPLYING QUALITATIVE CHARACTERISTIC OF RELEVANCEREPORTING INVENTORY AT THE LOWER COST OR NET REALISABLE VALSUE AS IT IS A BETTER INDICATION OF THE FUTURE ECONOMIC BENEFIT OF THE INVENTORY. THI VALUE CAN ASSIST IN DECISION MAKINF FOR THE OWNER BECAUSE THEY CAN DECIDE WHAT THE SELLING PRICE WILL BE
  25. 25DEFINTION OF MATERIALITYINFO IS MATERIAL IF ITS OMISSION COULD INFLUENCE THE ECONOMIC DECISION OF USERS. CONSIDERED MATERIAL IF ITS NATURE OR SIZE IS LIKLEY TO INFLUENCE DECISION MAKING.
  26. 26APLYING QUALITATIVE CHARACTERISTIC OF MATERIALITYTHE DISCLOSURE OF ACCUMULATED DEPRECIATION ON MACHINERY IS A LARGE AMOUNT AND THEREFORE LIKLEY TO INFLUENCE DECISIONS SUCH AS WHETHER TO UPGRADE/REPLACE THE MACHINERY.
  27. 27DEFINITION OF FAITHFUL REPRESENTATIONFOR INFORMATION TO BE REPRESENTED FAITHFULLY IT MUST BE:
    -COMPLETE-INCLUDE ALL INFO NECESSARY TO UNDERSTAND TRANSACTION.
    -NEUTRAL- FREE FROM BIAS AND NOT PRESENTED IN A MISLEADING WAY.
    -FREE FROM ERROR.
  28. 28APPLYING QUALITATIVE CHARACTERISTIC OF FAITHFUL REPRESENTATIONTHE INFO REPORTED IN THE STATEMENT OF FINANCIAL POSITION SHOULD BE BASED ON INFORMATION FROM SOURCE DOCUMENTS.
  29. 29DEFINITION OF COMPARABILITYTHE USERS OF FINANCIAL STATEMENTS MUST BE ABLE TO COMPARE THE RESUTS OVER TIME AND WITH THOSE OF OTHER ENTITIES IN ORDER TO IDENTIFY TRENDS. THOSE TRENDS CAN BE INVESTIGATED.
  30. 30APPLYING QUALITATIVE CHARACTERISTIC OF COMPARABILITYALLOWS USERS TO COMPARE WHETHER SPENDING MONEY ON PURCHASING AS ASSET HAS INCREASED THE ENTITY'S INCOME OR NOT OR WHETHER THE PROFIT IS INCREASING FROM YEAR TO YEAR.
  31. 31DEFINITION OF TIMELINESSTHE INFORMATION SHOULD BE AVAILABLE IN TIME TO BE CAPABLE OF INFLUENCING DECISIONS-OTHERWISE IT LOSES ITS RELEVANCE.
  32. 32APPLYING QUALITATIVE CHARACTERISTIC FOR TIMLINESSTHE INCOME STATEMENT AND STATEMENT OF FINANCIAL POSITION SHOULD BE AVAILABLE AS SOON ASIS REASONABLY POSSIBLE AFTER THE END OF THE FINANCIAL YEAR.
  33. 33DEFINITION FOR UNDERSTANDABILITYINFO IN UNDERSTANDABLE WHEN ITS CLASSIFIED, CHARACTERISED AND PRESENTED CLEARLY. MAKES FINANCIAL STATEMENTS ABLE TO BE UNDERSTOOD BY USERS WITH KNOWLEDGE OF THE BUSINESS.
  34. 34APPLYING QUALITATIVE CHARACTERISTIC FOR UNDERSTANDABILITYCLASSIFYING ASSETS, LIABILITIES, INCOME AND EXPENSES CORRECTLY.
  35. 35DEFINITION FOR VERIFIABLEINFORMATION IS VERIFIABLE WHEN KNOWLEDGEABLE AND INDEPENDENT PEOPLE CAN REACH A CONSENSUS THAT AN EVENT, ACCOUNT OR TRANSACTION IS FAITHFULLY REPRESENTED.
  36. 36APPLYING QUALITATIVE CHARACTERISTIC FOR VERIFIABLESHARES REPORTED IN THE SOFP CAN BE VERIFIED AND CONFIRMED BY KNOWLEDGEABLE AND INDEPENDENT PEOPLE AS THERE WILL BE SHARE CERTIFICATES AND THE CURRENT MARKET VALUE OF THE SHARES WOULD BE AVAILABLE TO THE PUBLIC. TRANSACTIONS WITH SOURCE DOCS ARE VERIFIABLE.
  37. 37DEFINITION OF ACCOUNTING ENTITYFOR ACCOUNTING PURPOSES, THE FINANCIAL AFFAIRS OF THE ENTITY MUST BE KEPT SEPARATE AND DISTINCT FROM THE FINANCIAL AFFAIRS OF THE OWNER.
  38. 38DEFINITION OF MONETARY MEAURMENTALL TRANSACTION, INCOMES, EXPENSES, LIABILITIES AND ASSETS ARE RECORDED IN A COMMON UNIT OF CURRENY - NZ DOLLARS
  39. 39DEFINITION OF PERIOD REPORTINGTHE LIFE OF THE BUSINESS IS DIVIDED UP INTO TIME PERIODS OF EQUAL LENGTH FOR REPORTING PURPOSES.
  40. 40DEFINITION OF GOING CONCERNIT IS ASSUMED FOR ACCOUNTING PURPOSES THAT THE BUSINESS WILL CONTINUE TO OPERATE INTO THE FORESEEABLE FUTURE.
  41. 41DEFINITION OF ACCRUAL BASISTHE EFFECT OF THE TRANSACTIONS ARE RECOGNISED WHEN THE OCCUR AND ARE REPORTED IN THE FINANCIAL STATEMENTS IN THE PERIOD TO WHICH THEY RELATE REGARDLESS OF WHETHER OR NOT CASH HAS CHANGED HANDS.
  42. 42DEFINITION OF HISTORICAL COSTASSETS AND LIABILITIES ARE RECORDED AT THEIR ORIGINAL PURCHASE COST AT THE TIME OF ACQUISITION.

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FlashCards sobre Sem título, criado por emma.botica em 01-11-2015.
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