1. Accounting and ethical principles Flashcards
Who are the primary users
> Existing and potential investors
Lenders
Other creditors
What’s do the primary individuals need information on
> Providing resources
Future cashflows
Asses the stewardship of resources
Where is this information provided
On the financial statement (on the financial accounts)
What assumptions are made on
That the company will continue to run and will not be liquidated or become bankrupt
What’s the accrual principle
Under the accruals principle the effects of transactions and other events are recognised when they occur.
Materiality
Materiality is information that is of importance and significance of an amount transaction or discrepancy (it could influence the decisions of the primary users
Prudence
The exercise of caution when making judgements
What characteristics enhance the usefulness of information that is relevant and faithfully represented
> Comparability
Verifiability
Timeliness
Understandability
What’s the acronym to remember the 5 fundamental ethical principles
POPIC
What does POPIC stand for
> Professional Behaviour
Objectivity
Professional competence and due care
Confidentiality
Professional Behaviour
What’s Professional Competence and due care
Maintain professional knowledge and skill and act with diligently
What’s Objectivity
Uncompromised by bias, conflict of interest or under the influence of others
Professional Behaviour
Abide by certain laws and regulations that will allow you to.
Avoiding any action that will put the professionalism under dispute
