Accounting Framework Flashcards
What is Managerial Accounting?
Internal info for decision-making and controls of operations
- Usually semi/annually
e.g For directors to make decisions
What is Financial Accouting?
External info, like published financial statements, very detailed, whenever required
- e.g Companies house
Internal users of Accounting data
Marketing, Management, Finance, HR
Shareholders = BOTH
External users of Accounting data
Banks + lenders, Investors, creditors, Competitors, Government for tax
What is Conceptual framework
Helps bring consistency to accounting concepts and practices
Who are the 2 Accounting standards?
- International Accounting Standards Board (IASB)
- International Financial Reporting Standards (IFRS) - PLC, Private reporting - London Stock exchange - Financial Accounting Standards Board (FASB)
- Generally Accepted Accounting Principles
What are Assets?
Resources owed by company with future economic benefit
e.g office, trade receivables
A = Liabilties + Equity
Liability
Obligation to transfer economics benefits as a result of past events
e.g money owed - accounts payable
Equity
Interest in assets of entity after deducting all its liabilities
- e.g retained earnings
What is going concern?
The entity will continue in operation for foreseeable
What is Accruals?
Revenue and costs are recognised as earned or incurred not when paid
What is the components of a financial statement?
- Statement of financial position
- Statement of profit and loss
- Statement of changes in equity
- Statement of cash flows
- Accounting policies and explanatory notes
What are the two levels of qualitative characteristics of useful financial info?
- IFRS identifies
- Fundamental Qualitative Characteristics - Useful
- Enhancing Qualitative Characteristics - enhance usefulness
Fundamental qualitative characteristics
- Relevance - influences stakeholders decisions
- Faithful representation - capture all economic activity - NEEDS - complete, neutral, free from error
Enhancing qualitative characteristics
- Comparability
- Verifiability - similar
- Understandability
- Timeliness - not out of date
