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ACCTG 211 > CHAPTER 1 > Flashcards

CHAPTER 1 Flashcards

1
Q

What are the purposes and who are the users of accounting?

A

PURPOSE: process of identifying, measuring and communicating economic information to permit informed judgements and decisions by users of the information.

USERS: Managers, investors, lenders, employees, suppliers, customers, governments, public

Information is to be useful.

IASB largely sees financial reporting as largely designed to supply investors with useful information.

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2
Q

What is the distinction between management and financial accounting?

A

MANAGEMENT: provision of financial and non-financial information intended to be useful to managers within the business.

FINANCIAL: intended for users outside the business. Financial accounting acts as the communicating process to those outside the entity.

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3
Q

How can accounting information be regulated?

A

TWO EXTREMES: MARKET AND THE STATE.

  • the market
  • the govt
  • parliament
  • stock exchange
  • accountancy profession
  • committee of members from large companies
  • independent foundation or trust
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4
Q

What is NZ IAS 1 about?

A

Presentation of financial statements

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5
Q

What is NZ IAS 7 about?

A

Statement of cash flows

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6
Q

What is NZ IAS 8 about?

A

Accounting policies and changes in accounting estimates and errors

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7
Q

What is NZ IAS 10 about?

A

Events after balance sheet date

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8
Q

What is NZ IAS 16 about?

A

P, P & E

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9
Q

What is NZ IAS 32 about?

A

Financial Instruments

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10
Q

What is NZ IAS 37 about?

A

Liabilities, provisions, contingent liabilities, and contingent assets

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11
Q

What is NZ IAS 36 about?

A

Impairment of assets

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12
Q

What is NZ IAS 38 about?

A

Intangible assets

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13
Q

What is NZ IAS 28 about?

A

Investments in associates and joint ventures

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14
Q

What is NZ IFRS 3 about?

A

Business combinations

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15
Q

What is NZ IAS 17 about?

A

Leases

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16
Q

What is NZ IFRS 10 about?

A

Consolidated financial statements

17
Q

Outline the role of national and international regulators.

A

TO COMPLETE

18
Q

Describe the various sources from which accounting rules can come.

A

IASB produces IFRS.

19
Q

Outline the two main types of legal systems and how they affect accounting.

A
  1. Roman codified law (civil law)
    - a comprehensive legal code
    - Changes take a lot of time.
    - Accounting is a part of the law. Very uniform and standardised.
  2. Common Law
    - Limited statute law
    - Large amounts of case law
    - More flexible.
    - Accounting is an independent discipline
20
Q

Explain the different ways in which entities might be legally organised.

A 
Sole Trader
Partnership
Private company
Private company (listed)
Group of companies
21
Q

Explain how the regulation of accounting is arranged in NZ.

A

Regulatory influence:

  • NZICA (accounting profession)
  • IFRS
  • NZX regulations (stock exchange)
  • Securities Act, Companies Act, Financial Reporting Act 1993.
  • External Reporting Board (XRB)
22
Q

Outline the international nature of accounting developments.

A

TO COMPLETE

23
Q

Suggest the major causes of international differences in accounting.

A
  1. PROVIDERS OF FINANCE
  2. LEGAL SYSTEMS
  3. TAXATION
  4. THE ACCOUNTING PROFESSION
    (i) Different needs arise because of different users.
    (ii) Different national environments (political, cultural, economic) lead to different accounting practices.
    (iii) Attitudes to ACCTG and its role differ around the world.
    (iv) Financial reporting reflect the biases and norms of societies.
    (v) language.
24
Q

Describe and discuss the main requirements of NZ IAS 1 in regards to the contents of FS.

A

TO COMPLETE

25
Q

Discuss the concept of comprehensive income.

A

TO COMPLETE

26
Q

Regulation in France?

A
  • Civil code (roman codified law)
  • Some companies use IFRS
  • Other entities use PCG (a large detailed document. Regulates how entries are to be made. GOVERNMENT AUTHORITY.
  • All large companies MUST be audited
  • Multiple companies act’s.
  • Stock exchange regulation for listed companies.
27
Q

Regulation in UK?

A
  • Common law
  • Accounting standards set by ASB (accounting standards board)
  • IFRS compulsory for consolidated FS of listed companies.
  • ALL companies except small ones must be audited.
  • Companies Act. FS must present a true and fair view.
  • SE regulation for listed companies.
28
Q

Regulation in the USA?

A
  • NO Companies Acts or codes.
  • No audit requirement
  • Stock Exchange Commission is primary regulator for listed companies.
  • Listed companies must follow GAAP and be AUDITED.
  • Penalties for rule breakers
  • GAAP prepared by SEC and Financial Accounting Standards Board (FASB)
29
Q

Regulation in China?

A
  • Central planning following communism
  • Chinese Communist Party codified business laws over time (Western influence)
  • Several stock exchanges
  • Professional accounting body
  • AS issued by Ministry of Finance
  • All listed companies are >50% owned by govt.

ACCTG 211 (5 decks)

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