CHAPTER 1 Flashcards
What are the purposes and who are the users of accounting?
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.
What is the distinction between management and financial accounting?
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.
How can accounting information be regulated?
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
What is NZ IAS 1 about?
Presentation of financial statements
What is NZ IAS 7 about?
Statement of cash flows
What is NZ IAS 8 about?
Accounting policies and changes in accounting estimates and errors
What is NZ IAS 10 about?
Events after balance sheet date
What is NZ IAS 16 about?
P, P & E
What is NZ IAS 32 about?
Financial Instruments
What is NZ IAS 37 about?
Liabilities, provisions, contingent liabilities, and contingent assets
What is NZ IAS 36 about?
Impairment of assets
What is NZ IAS 38 about?
Intangible assets
What is NZ IAS 28 about?
Investments in associates and joint ventures
What is NZ IFRS 3 about?
Business combinations
What is NZ IAS 17 about?
Leases
What is NZ IFRS 10 about?
Consolidated financial statements
Outline the role of national and international regulators.
TO COMPLETE
Describe the various sources from which accounting rules can come.
IASB produces IFRS.
Outline the two main types of legal systems and how they affect accounting.
- 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. - Common Law
- Limited statute law
- Large amounts of case law
- More flexible.
- Accounting is an independent discipline
Explain the different ways in which entities might be legally organised.
Sole Trader Partnership Private company Private company (listed) Group of companies
Explain how the regulation of accounting is arranged in NZ.
Regulatory influence:
- NZICA (accounting profession)
- IFRS
- NZX regulations (stock exchange)
- Securities Act, Companies Act, Financial Reporting Act 1993.
- External Reporting Board (XRB)
Outline the international nature of accounting developments.
TO COMPLETE
Suggest the major causes of international differences in accounting.
- PROVIDERS OF FINANCE
- LEGAL SYSTEMS
- TAXATION
- 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.
Describe and discuss the main requirements of NZ IAS 1 in regards to the contents of FS.
TO COMPLETE
