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Fin Reporting > Chap 1 > Flashcards

Chap 1 Flashcards

1
Q

Accounting?

A

is concerned with collecting, analysing, communicating financial information.

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2
Q

Ultimate aim of Acc?

A

is to help those using this information to make more informed decisions.

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3
Q

The managers need accounting information to decide whether to? (5 ý)

A
  1. develop new products or services
  2. increase or decrease the price or quantity of existing products or services
  3. borrow money to help finance the business
  4. increase or decrease the operating capacity of the business
  5. Change the methods of purchasing, production or distribution
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4
Q

Vd cho develop new products or services?

A

(As with a computer manufacturer developing a new range of computers)

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5
Q

Vd cho increase or decrease the price or quantity of existing products or services?

A

(As with a telecommunications business changing its mobile phone call or text charges)

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6
Q

Vd cho borrow money to help finance the business?

A

(As with a supermarket wishing to increase the number of stores it owns)

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7
Q

Vd cho increase or decrease the operating capacity of the business?

A

(As with a beef farming business reviewing the size of its herd)

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8
Q

Vd cho change the methods of purchasing, production or distribution?

A

(As with a clothes retailer switching from UK to overseas suppliers)

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9
Q

Others outside the business need financial information to decide whether to? (3 ý)

A
  1. invest or disinvest in the ownership of the business
  2. lend money to the business
  3. offer the credit facilities.
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10
Q

Vd cho invest or disinvest in the ownership of the business?

A

(For example, investors who buy or sell shares)

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11
Q

Vd cho lend money to the business?

A

Banks providing loan

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12
Q

Vd cho offer the credit facilities.

A

Suppliers of goods or services offering delayed payment

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13
Q

Finance (or financial management)?

A

is concerned with the ways in which funds for business are raised and invested. (cái ni nằm at the heart of business)

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14
Q

Bản chất của Finance

A

In essence, business raises funds from investors (owners and lenders) -> make investments (in equipments, premises, inventories,..) với mục đích làm cho business vs owners giàu hơn. Funds cần được raised phù hợp với nhu cầu của business

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15
Q

Understanding of finance helps in identifying (4 ý)

A
  • The main forms of finance available
  • The costs and benefits of each form
  • The risks associated with each form
  • The role of financial markets in supplying finance
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16
Q

Understanding of finance helps in evaluating (2 ý)

A
  • The returns from that investment

- The risk associated with that investment

17
Q

Why does the quality of the investment decisions have profound impacts on the fortunes of the business?

A

Because business tends to raise and invest funds in large amounts for long periods of time.

18
Q

There is a considerable overlap between the 2 subjects

A

Vd Acc reports are a major source of information for financing and investment decisions making.

19
Q

Main users of financing/ acc of information relating to a business? (10 người)

A
  • Customers
  • Competitors
  • Managers
  • Owners
  • Community representatives
  • Employees and their representatives
  • Government
  • Investment Analysts
  • Lenders
  • Suppliers
20
Q

Qualities that influence usefulness of Accounting information (7 cái)

A
  • Reliability
  • Relevance
  • Understandability
  • Comparability
  • Verifiability
  • Timeliness
  • Cost straint
21
Q

Nội dung đặc tính Relevance?

A
  • Acc info must be relevant to the prediction of futures events (vd profits next year là nhiu) or relevant in confirming past events (vd profits earned last year). (2) quan trọng vì users cần check accuracy of earlier predictions mà họ have made để judge the accuracy of current predictions.
  • To influence the decisions, acc info must be availabe when decisions are being made => Relevant info must be timely
22
Q

Nội dung đặc tính Reliability?

A

Acc must be free from significant error and bias. It should be relied on by managers để represent information.

23
Q

Problem của đặc tính Relevance vs Reliability?

A

Acc info which is highly relevant thì ko reliable và ngược lại. Khi strike the right balance between 2 cái ni thì needs of users should be overriding consideration.

24
Q

Nội dung đặc tính Comparability?

A
  • Enable users to identify changes in the business over time (vd trend in sales revenue trong 5 năm)
  • Also help users to evaluate the performance of the business in relation to similar business
  • Đặc tính ni đạt được bằng cách treating items that are basically the same in the same manner for acc purposes.
  • Đặc tính ni được enhanced by making clear the policies adopted in measuring and presenting the info.
25
Q

Nội dung đặc tính Understandability?

A

Acc reports should be expressed rõ ràng và những người mà the info aim at phải hiểu được

26
Q

Ngoài những đặc tính nớm acc info must also across the threshold of materiablity vì sao

A

Nếu 1 acc info is not material, nó ko nên đc bỏ vô reports vì it merely clutter them up and interfere with the users’ ability to interpret the financial results.

27
Q

1 acc info mà hội tụ reliable, relevant, comparable, understood vs material vì sao đôi khi phải loại bỏ khỏi reports and thực tế phải chọn not to produce or discover the info?

A
  • vì cost > potential benefit of having that info

=> This cost-benefit issue will limit the amount of acc info provided

28
Q

Producing acc info is very costly. The costs are difficult to quantify. Kể tên các cost?

A
  • Direct, out of pocket cost là salaries của mấy mẹ acc staff. Đây là the only part of the total cost involved.
  • Less direct cost such as the cost of user’s time spent on phân tích và interpreting the info contained in the report.
29
Q

Features của acc info system?

A
  1. Identify và capture relevant info ( financial info)
  2. record, in a systematic way, the info collected
  3. analyze và interpret the info collected
  4. report the info in a manner that suit the needs of users
    => Info identification -> Info recording -> Info analysis -> Info reporting
30
Q

Main areas of differnces giữa management acc vs financial acc? (Slide 10/40 W1)

A
  1. Nature of the report produced
  2. Level of detail
  3. Regulation
  4. Reporting Interval
    FA thì 1 năm, nửa năm, 1/4 năm
    MA thì monthly, weekly, daily
  5. Time orientation
    FA thì backward-looking, past info
    MA thì cả future vs past info
  6. Range and quality of info
31
Q

Reasons dẫn tới scandal (obscure losses and inflate benefits)

A
  • Pressure on managers to meet unrealistic expectations of investors for continually rising profits.
  • Do excutives tham (lương của mấy ngừi ni phụ thuộc vô financial performance)
32
Q

Result của scandals?

A

Undermine (huỷ) the credibility (sự đáng tin) của financial statement và tạo ra nhìu stricter regulations lquan tới financial info.

33
Q

Nội dung đặc tính Cost Straint?

A

Benefits of information must outweigh cost of producing it

34
Q

Nội dung đặc tính Verifiability?

A

Subjective judgement, evidence

35
Q

Trong quá khứ chỉ gather info cho manager. Now, Attitude and behaviour of customers and rival business là mục tiêu của info-gathering. Vì sao?

A
  • Secure vs maintain the competitive ads over rivals mới successful
  • Để có ads ni thì business phải có customer driven (satisfy customer needs). Cái ni dẫn tới MA info includes details of customer vs market. Ngoài ra còn cần info of costs vs benefits của rivals (đc coi là benchmark-điểm chuẩn) để gauge competitiveness.
36
Q

Environment của business trở nên turbulent and competitive. Reasons? (6 ý)

A
  1. The increasing sophistication of customers
  2. The development of a global economy where national frontiers (lĩnh vực) become less important
  3. Rapid changes in technology
  4. The deregulation of domestic market (vd điện,ga,nc)
  5. Increasing pressure from owners (shareholders) for competitive economic returns
  6. Increasing volatility (tính ko ổn định) of financial markets
37
Q

Để xử cái turbulent and competitive environmet cần strategic management. Nội dung?

A

Cái ni provide purpose vs ensure action hopli để đạt đc purpose. Actions phải liên kết internal resources vs external environment of competitors, customers, suppliers,.. Phải take account of business strength vs weakness , opportunities offered (vd expand market) vs threats (vd đối thủ giảm giá hàng bán) posed by external environment

38
Q

Non-for-profit organisations?

A

Charities, churches, clubs and associations, uni, local government authorities, national government department, trade unions

39
Q

Important aspects of acc and finance?

A
  1. How acc reports should be read and interpreted
  2. How financial plans are made
  3. How investment decisions are made
  4. How businesses are financed

Fin Reporting (11 decks)

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