Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

ACA KAPLAN > Chapter 5 > Flashcards

Chapter 5 Flashcards

1
Q

Who is the board refer to?

A

the international accounting standards board

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What role does the board have?

A

they are the independent accounting standard setting body of the IFRS foundation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is the board responsible for?

A

issuing international accounting standards

these come in the form of IAS standards and IFRS standards

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

According to the conceptual framework, what is the objective of financial statements?

A

provide financial information about the reporting entity that is useful to existing and potential investors, lenders and other creditors in making decisions relating to providing resources to the entity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are the two fundamental characteristics of the fundamental qualitative characteristics aligned by the conceptual framework?

A

relevance

faithful representation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What does relevance mean in terms of the qualitative characteristics?

A

financial information is useful if it can assist users decision-making by helping them evaluate past, present or future events or by confirming, or correcting their existing values

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What two things would relevant information have?

A

predictive value

confirmatory value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is predictive value?

A

helps users in assessing the future of the business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What it confirmatory value?

A

helps users in confirming past predictions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is are the qualities of faithful representation?

A

in order to faithfully represent the transaction and other events, information must be

complete

neutral

free from error

showing substance over form

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What does showing substance over form suggest?

A

transactions must be presented according to their economic substance rather than legal form

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What does prudence mean?

A

exercising caution under situations of uncertainty

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

How is neutrality supported in faithful representation?

A

through the exercise of prudence

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What are the 4 enhancing characteristics of relevance and faithful representation?

A

comparability

verifiability

timelessness

understandability

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Comparability

A

enhancing factor

  • information should be produced on consistent basis
  • the financial statements should be comparable with the financial statements of - other entities and the same entity for earlier period
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Verifiability

A

enhancing factor

  • info can be checked
  • a consensus could be reached by observers (although not necessarily through complete agreement) and that the information faithfully represents transactions or events
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Timeliness

A

info should be supplied to users in time to be used in decision making

recent info is generally more useful

some info remains timely for a long time after the end of a reporting period

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Understandability

A

information must be understandable to users who have a reasonable knowledge of business and accounting

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Why is ISA 1 Presentation of Financial Statement important?

A

it deals with the structure and content of the financial statements

there are prescribed formats that are recommended

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What does the ISA 1 Presentation of Financial Statement comprises? (5)

A

s of financial position

s of profit or loss

s showing either changes of equity or changes in equity except for those arising with owners

s of cash flow

accounting policies

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Objective of IAS 1 Presentation of Financial Statement

A

to ensure comparability by prescribing the basis for the presentation of general-purpose financial statement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What is the objective of financial statement?

A

to provide a summary of the accounting transactions for a period

23
Q

What does the IAS 1 Presentation of Financial Statement require the fair representation of?

A

financial position

financial performance

cash flows of the entities

24
Q

What does the fair presentation require?

A

the faithful representation of the effects of transaction in accordance with the requirements of the conceptual framework

25
Q

What does the application of the IFRS Standards presume to achieve?

A

fair presentation

26
Q

Accrual concept

A

requires that transactions and events recognised when they occur, not when cash is received or paid for them

27
Q

What does accrual concept mean in terns of cost?

A

it means that the cost incurred in generating income are matched against the revenues they have generated

28
Q

What does the going concern concept require?

A

the entity is viewed was continuing its operations for the foreseeable future - at least 12 months

an assumption is made that there is no intention or necessity to liquidate or curtail materially in its operations

29
Q

What does the going concern concept mean for the assets?

A

this means that assets do not need to be valued on a break-up basis

the value at which they could be sold separately by the business if the business were to be liquidated

30
Q

What happens if the management of a business does not believe that the going concern concept should apply?

A

they should disclose

the fact itself

the basis on which the accounts have been prepared

the reason why the entity is no longer a going concern

31
Q

What are the other accounting concepts and conversions which are applied in the process?

A

materiality

32
Q

What materiality mean according to the IAS 1 Presentation of Financial Statements?

A

information is material if its omission, misstatement or obscuring could influence the economic decisions of users taken on the basis of the financial statements

33
Q

What does materiality depend on?

A

on the size or effect of the item judged in particular circumstances of its omission or misstatement

34
Q

What is the rule of thumb for determining whether an item is a material

A

determining it is subjective anyways

a percentage is often used

but any decision made must be made in context

35
Q

What is the IAS 1 Presentation of Financial Settings rule on offsetting?

A

they do not allow assets and liabilities, or income and expenses to be offset (deducted) from one another unless another international accounting standard allows it

36
Q

What is an important accounting convention in the statement of financial position?

A

assets and liabilities are recorded

37
Q

What happens to assets in important accounting convention in the statement of financial position?

A

assets are recorded at the amount of cash or cash equivalent paid, or fair value of the consideration given for the

38
Q

What happens to liabilities in important accounting convention in the statement of financial position

A

liabilities are recorded at the amount of proceeds received in exchange for the obligation

39
Q

What is an advantage of historical cost accounting?

A

removes subjectivity of estimating the value of an asset or liability

eg. there is usually objective evidence of what an asset cost

40
Q

Why are regulations needed?

A
  • ensures accounts are sufficiently reliable and useful, prepared without unnecessary delay
  • financial accounts are used for reporting to shareholders for a company on the condition and performance of the company
  • the annual financial statements are the main document used for reporting to the shareholders of a company on the condition and performance of the company
  • the stock markets rely on financial statements published by the companies
  • international investors prefer information to be presented in a similar and comparable way - no matter where the company is based
41
Q

Where is the technical definition of sustainability from?

A

1987 Brundtland report

42
Q

What is the definition of sustainability?

A

development that meets the needs of the present without compromising the ability of the future generations to meet their own needs

43
Q

Who are the Financial Stability Board (FSB)?

A

an international body that monitors the global financial system

44
Q

What did the FSB do?

A

created the task force on climate related financial disclosers (TCFD)

to develop recommendations on the disclosers companies should make to help users properly assess risks related to climate change

45
Q

In 2021, what did the IFRS foundation create?

A

the international sustainability standards board (ISSB)

46
Q

What did the ISSB have to do?

A

they develop a set of sustainability disclosure standards (IFRS Sustainability Disclosure Standards)

47
Q

When were the first standards of the IFRS issued?

A

in June 2023

aimed to provide users with reliable, comparable sustainability-related information

the core content of these standards is consistent with recommendations of TCFD

48
Q

What are the two fundamentals in sustainability reporting?

A

impacts and dependencies

49
Q

What is an impact?

A

the effect of the organisation

50
Q

What is a dependency?

A

the effect on the organisation

51
Q

Explain impact further

A

how the decisions and actions of an organisation positively and negatively affect environmental, social and governanace (ESG) issues

52
Q

Explain dependencies further

A

how environmental, social and governance (ESG) issues can affect the organisation’s ability to create and maintain value

53
Q

Examples of Impacts

A

human rights

health and safety

carbon emmisons

depletion and scarcity of natural resources

endangers species

54
Q

Examples of Dependencies

A

employee welfare

environmental change and pollution

employee know-how

supplier and customer relationship

ACA KAPLAN (13 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions