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Financial Accounting Glossary Flashcards

1
Q

What are Accounting Estimates?

A

Approximations made in financial reporting to account for uncertainties in financial data.

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2
Q

What are Accounting Policies?

A

Specific principles, bases, conventions, rules, and practices applied by an entity in preparing its financial statements.

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3
Q

What are Accounting Ratios?

A

Financial metrics used to evaluate a company’s performance and financial health by comparing different financial statement items.

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4
Q

What are Accounting Standards?

A

Guidelines and rules that govern how financial statements are prepared and presented.

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5
Q

What is Accrual Basis?

A

An accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when cash is exchanged.

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6
Q

What are Actuarial Gains and Losses?

A

Changes in the value of a defined benefit plan’s obligations due to changes in actuarial assumptions.

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7
Q

What is an Adjusting Event?

A

An event that occurs after the reporting period but before the financial statements are issued, which affects the amounts recognized.

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8
Q

What is Aggregation?

A

The process of combining multiple financial data points into a single summary figure.

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9
Q

What is Amortisation?

A

The gradual reduction of an intangible asset’s value over time through systematic charges to expense.

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10
Q

What is Amortised Cost?

A

The cost of a financial asset or liability adjusted for any principal repayments and amortisation of any difference between the initial amount and the maturity amount.

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11
Q

What is an Asset?

A

A resource controlled by an entity that is expected to provide future economic benefits.

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12
Q

What is Asset Turnover?

A

A financial ratio that measures the efficiency of a company’s use of its assets in generating sales revenue.

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13
Q

What are Associates?

A

Entities over which an investor has significant influence but not control, typically owning 20-50% of the voting rights.

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14
Q

What is a Balance Sheet?

A

A financial statement that presents an entity’s financial position at a specific point in time, detailing assets, liabilities, and equity.

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15
Q

What is Basic Earnings Per Share?

A

A measure of a company’s profitability calculated by dividing net income by the weighted average number of shares outstanding.

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16
Q

What are Bonus Issues?

A

Additional shares given to existing shareholders, usually at no cost, to reward them and increase the number of shares in circulation.

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17
Q

What are Borrowing Costs?

A

Interest and other costs incurred by an entity in connection with borrowing funds.

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18
Q

What are Business Combinations?

A

Transactions in which an acquirer obtains control of one or more businesses.

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19
Q

What is Capital?

A

Financial assets or resources that companies use to fund their operations and growth.

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20
Q

What is Capital Gearing Ratio?

A

A measure of financial leverage that compares the proportion of debt to equity in a company’s capital structure.

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21
Q

What is Capital Maintenance?

A

The concept that a company must maintain its capital to ensure it can continue operations and meet obligations.

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22
Q

What is Carrying Amount?

A

The value at which an asset is recognized on the balance sheet, after deducting any accumulated depreciation or impairment.

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23
Q

What is Cash?

A

Liquid assets that are readily available for use in transactions.

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24
Q

What is Cash Equivalent?

A

Short-term investments that are easily convertible to cash with minimal risk of value changes.

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25
Q

What is a Cash-Generating Unit?

A

The smallest identifiable group of assets that generates cash inflows independently of other assets.

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26
Q

What is Comparability?

A

The quality of financial information that allows users to identify similarities and differences between two sets of financial statements.

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27
Q

What is Comparative Information?

A

Financial data presented for previous periods to provide context for current financial statements.

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28
Q

What is Completeness?

A

The principle that all necessary information must be included in financial statements to provide a true and fair view.

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29
Q

What is Compliance with Standards?

A

Adherence to established accounting standards and regulations in financial reporting.

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30
Q

What are Components of Equity?

A

The various elements that make up an entity’s equity, including share capital, retained earnings, and other reserves.

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31
Q

What are Components of Financial Statements?

A

The individual parts that make up financial statements, such as the income statement, balance sheet, and cash flow statement.

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32
Q

What are Compound Financial Instruments?

A

Financial instruments that have characteristics of both debt and equity.

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33
Q

What is Comprehensive Income?

A

The total change in equity from non-owner sources, including all revenues, expenses, gains, and losses.

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34
Q

What is a Conceptual Framework?

A

A set of interrelated objectives and fundamentals that guide the preparation and presentation of financial statements.

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35
Q

What are Condensed Financial Statements?

A

Summarized financial statements that provide a less detailed view of a company’s financial position and performance.

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36
Q

What is Consistency?

A

The principle that a company should use the same accounting methods and policies from one period to the next.

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37
Q

What are Consolidated Financial Statements?

A

Financial statements that present the financial position and performance of a parent company and its subsidiaries as a single entity.

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38
Q

What is a Constructive Obligation?

A

An obligation that derives from an entity’s actions, indicating to other parties that it will accept certain responsibilities.

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39
Q

What is a Contingent Asset?

A

A potential asset that may arise from future events, whose existence is uncertain.

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40
Q

What is a Contingent Liability?

A

A potential obligation that may arise depending on the outcome of a future event.

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41
Q

What are Contracts with Customers?

A

Agreements that outline the terms of sales and services provided to customers.

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42
Q

What is Control?

A

The power to govern the financial and operating policies of an entity to obtain benefits from its activities.

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43
Q

What are Conversion Costs?

A

Costs incurred to convert raw materials into finished goods, including labor and overhead.

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44
Q

What are Corporate Assets?

A

Assets that are owned by a corporation and used in its operations.

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45
Q

What are Cost Formulas?

A

Methods used to determine the cost of inventory, such as FIFO (First In, First Out) or LIFO (Last In, First Out).

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46
Q

What is a Cost Model?

A

An accounting model that values assets at their historical cost less any accumulated depreciation and impairment.

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47
Q

What is Credit Risk?

A

The risk of loss due to a borrower’s failure to repay a loan or meet contractual obligations.

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48
Q

What is Currency Risk?

A

The risk of financial loss due to fluctuations in exchange rates.

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49
Q

What are Current Assets?

A

Assets that are expected to be converted into cash or used up within one year.

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50
Q

What is Current Cost?

A

The cost of an asset based on its current replacement value.

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51
Q

What is Current Cost Accounting?

A

An accounting method that adjusts financial statements to reflect current costs rather than historical costs.

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52
Q

What are Current Liabilities?

A

Obligations that are expected to be settled within one year.

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53
Q

What is Current Purchasing Power Accounting?

A

An accounting method that adjusts financial statements for changes in the general price level.

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54
Q

What is Current Ratio?

A

A liquidity ratio that measures a company’s ability to pay short-term obligations with its current assets.

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55
Q

What is Current Service Cost?

A

The increase in the present value of a defined benefit obligation resulting from employee service in the current period.

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56
Q

What is Current Tax?

A

The amount of income tax payable (or recoverable) in respect of the taxable profit (or loss) for the current period.

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57
Q

What is Current Value?

A

The value of an asset or liability at the current date, reflecting current market conditions.

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58
Q

What is Date of Transition?

A

The date on which an entity adopts a new accounting standard.

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59
Q

What is Deferred Tax?

A

Taxes that are assessed but not yet paid, often due to timing differences between accounting and tax treatment.

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60
Q

What is Defined Benefit Obligation?

A

The present value of expected future payments required to settle a defined benefit plan’s obligations.

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61
Q

What is a Defined Benefit Plan?

A

A retirement plan where an employer guarantees a specific retirement benefit amount based on a formula.

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62
Q

What is a Defined Contribution Plan?

A

A retirement plan where the employer, employee, or both make contributions, and the final benefit depends on investment performance.

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63
Q

What is Depreciable Amount?

A

The cost of an asset minus its residual value, which is allocated as an expense over the asset’s useful life.

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64
Q

What is Depreciation?

A

The systematic allocation of the depreciable amount of an asset over its useful life.

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65
Q

What is Development Expenditure?

A

Costs incurred in the development phase of a project, which may be capitalized if certain criteria are met.

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66
Q

What is Diluted Earnings Per Share?

A

A measure of a company’s profitability that accounts for all potential shares that could be created through convertible securities.

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67
Q

What is Diminishing Balance Method?

A

A method of calculating depreciation where a fixed percentage is applied to the carrying amount of the asset each year.

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68
Q

What is Direct Method?

A

A method of preparing the cash flow statement that lists cash inflows and outflows directly.

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69
Q

What are Discontinued Operations?

A

Parts of a business that have been sold or are being shut down, which are reported separately in financial statements.

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70
Q

What is Discounting?

A

The process of determining the present value of future cash flows by applying a discount rate.

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71
Q

What is a Disposal Group?

A

A group of assets and liabilities that are to be disposed of together as a single transaction.

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72
Q

What is Dividend Cover?

A

A ratio that indicates how many times a company can pay dividends to its shareholders from its net income.

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73
Q

What is Dividend Yield?

A

A financial ratio that shows how much a company pays in dividends each year relative to its stock price.

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74
Q

What are Dividends?

A

Payments made by a corporation to its shareholders, usually as a distribution of profits.

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75
Q

What is a Downstream Transaction?

A

A transaction where an entity sells goods or services to its subsidiaries or associates.

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76
Q

What is Earnings Per Share (EPS)?

A

A measure of a company’s profitability calculated by dividing net income by the number of outstanding shares.

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77
Q

What is the Effective Interest Method?

A

A method for calculating the amortized cost of a financial asset or liability, which allocates interest expense or income over the life of the instrument.

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78
Q

What are Efficiency Ratios?

A

Financial metrics that assess how effectively a company utilizes its assets and manages its operations.

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79
Q

What are the Elements of Financial Statements?

A

The fundamental components that make up financial statements, including assets, liabilities, equity, income, and expenses.

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80
Q

What are Employee Benefits?

A

Compensation provided to employees in addition to their regular salaries, including pensions, health insurance, and other perks.

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81
Q

What are Enhancing Characteristics?

A

Qualities that improve the usefulness of financial information, such as comparability, verifiability, timeliness, and understandability.

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82
Q

What is an Entity?

A

A legal or economic unit that engages in business activities and can enter into contracts.

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83
Q

What is Equity?

A

The residual interest in the assets of an entity after deducting liabilities; represents ownership in the company.

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84
Q

What is an Equity Instrument?

A

A financial instrument that represents an ownership interest in an entity, such as shares of stock.

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85
Q

What is the Equity Method?

A

An accounting technique used to account for investments in associates, where the investment is recorded at cost and adjusted for the investor’s share of profits or losses.

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86
Q

What are Errors in financial statements?

A

Mistakes in financial statements that arise from mathematical mistakes, mistakes in applying accounting policies, or oversight.

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87
Q

What are Estimates in financial reporting?

A

Approximations made in financial reporting to account for uncertainties in financial data.

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88
Q

What is Estimation Uncertainty?

A

The risk that the actual outcomes will differ from the estimates used in financial reporting.

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89
Q

What are Events After the Reporting Period?

A

Significant occurrences that happen after the end of the reporting period but before the financial statements are issued.

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90
Q

What are Exchange Differences?

A

Variations in the value of foreign currency transactions due to changes in exchange rates.

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91
Q

What is Expected Value?

A

A calculated average of all possible outcomes, weighted by their probabilities, often used in decision-making.

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92
Q

What are Expenses?

A

Costs incurred by a business in the process of generating revenue.

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93
Q

What is an Exposure Draft?

A

A document released by standard-setting bodies to solicit public comments on proposed accounting standards.

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94
Q

What are Extraordinary Items?

A

Unusual and infrequent events that have a significant impact on a company’s financial results.

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95
Q

What is Fair Presentation?

A

The requirement that financial statements present a true and fair view of the entity’s financial position and performance.

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96
Q

What is Fair Value?

A

The estimated price at which an asset could be bought or sold in a current transaction between willing parties.

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97
Q

What is Fair Value Less Costs of Disposal?

A

The fair value of an asset minus the costs associated with selling it.

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98
Q

What is Fair Value Less Costs to Sell?

A

Similar to the above, this refers to the fair value of an asset after deducting selling costs.

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99
Q

What is the Fair Value Model?

A

An accounting approach that measures assets and liabilities at their fair value rather than historical cost.

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100
Q

What is Fair Value Through OCI?

A

A classification for financial assets where changes in fair value are recognized in other comprehensive income.

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101
Q

What is Fair Value Through Profit or Loss?

A

A classification for financial assets where changes in fair value are recognized in profit or loss.

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102
Q

What is Faithful Representation?

A

The principle that financial information should accurately reflect the economic phenomena it purports to represent.

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103
Q

What is FASB?

A

An independent organization that establishes financial accounting and reporting standards in the U.S.

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104
Q

What is a Finance Lease?

A

A lease that transfers substantially all the risks and rewards of ownership of an asset to the lessee.

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105
Q

What is a Financial Asset?

A

Any asset that is cash, an equity instrument of another entity, or a contractual right to receive cash or another financial asset.

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106
Q

What is Financial Capital Maintenance?

A

The concept that a company must maintain its capital to ensure it can continue operations and meet obligations.

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107
Q

What are Financial Instruments?

A

Contracts that create financial assets for one entity and financial liabilities or equity instruments for another.

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108
Q

What is a Financial Liability?

A

A contractual obligation to deliver cash or another financial asset to another entity.

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109
Q

What is Financial Reporting?

A

The process of providing financial information to various stakeholders to aid in decision-making.

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110
Q

What are Financial Statements?

A

Structured reports that summarize the financial performance and position of an entity.

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111
Q

What are Financing Activities?

A

Transactions that result in changes in the size and composition of the equity and borrowings of the entity.

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112
Q

What is First-in, First-out (FIFO)?

A

An inventory valuation method where the oldest inventory items are recorded as sold first.

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113
Q

What is First-time Adoption?

A

The initial application of a new accounting standard by an entity.

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114
Q

What are Fixed Production Overheads?

A

Costs that do not change with the level of production, such as rent and salaries of production staff.

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115
Q

What are Foreign Currency Transactions?

A

Transactions that are denominated in a currency other than the entity’s functional currency.

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116
Q

What are Foreign Operations?

A

Business activities conducted in a country other than the entity’s home country.

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117
Q

What is Functional Currency?

A

The currency of the primary economic environment in which an entity operates.

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118
Q

What are Fundamental Characteristics?

A

The essential qualities that make financial information useful, including relevance and faithful representation.

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119
Q

What is GAAP?

A

A framework of accounting standards, principles, and procedures used in financial reporting.

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120
Q

What is the Gearing Ratio?

A

A financial ratio that compares a company’s debt to its equity, indicating financial leverage.

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121
Q

What is Going Concern?

A

The assumption that an entity will continue to operate for the foreseeable future.

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122
Q

What is Goodwill?

A

An intangible asset that arises when a company acquires another company for more than the fair value of its net identifiable assets.

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123
Q

What are Government Grants?

A

Financial assistance provided by the government to support specific activities or projects.

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124
Q

What is Gross Profit Margin?

A

A profitability ratio that shows the percentage of revenue that exceeds the cost of goods sold.

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125
Q

What is a Group?

A

A collection of entities that are controlled by a parent company.

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126
Q

What are Group Financial Statements?

A

Financial statements that present the financial position and performance of a group of companies as a single entity.

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127
Q

What is Historical Cost?

A

The original monetary value of an asset at the time of acquisition.

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128
Q

What is Historical Cost Accounting?

A

An accounting method that records assets and liabilities at their original purchase price.

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129
Q

What are Holding Gains?

A

Increases in the value of an asset that are not realized until the asset is sold.

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130
Q

What are Hyperinflationary Economies?

A

Economies experiencing extremely high and typically accelerating inflation rates.

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131
Q

What are IAS?

A

Standards issued by the International Accounting Standards Committee, which were replaced by IFRS.

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132
Q

What is IASB?

A

The independent body responsible for developing and promoting International Financial Reporting Standards (IFRS).

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133
Q

What is the IASB Conceptual Framework?

A

A set of concepts that guide the development of accounting standards and the preparation of financial statements.

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134
Q

What is an Identifiable Asset?

A

An asset that can be separated from the entity and sold, transferred, licensed, rented, or exchanged.

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135
Q

What is the Identification of Financial Statements?

A

The process of recognizing and categorizing financial statements for reporting purposes.

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136
Q

What are IFRS?

A

Standards developed by the IASB that govern financial reporting internationally.

137
Q

What is IAS 1?

A

Presentation of Financial Statements

Framework for presenting financial information

138
Q

What is IAS 2?

A

Inventories

Valuation and cost flow assumptions

139
Q

What is IAS 7?

A

Statement of Cash Flows

Reporting cash inflows and outflows

140
Q

What is IAS 8?

A

Accounting Policies, Changes in Accounting Estimates and Errors

Consistency in accounting practices

141
Q

What is IAS 10?

A

Events After the Reporting Period

Recognizing and disclosing subsequent events

142
Q

What is IAS 12?

A

Income Taxes

Accounting for current and deferred tax

143
Q

What is IAS 16?

A

Property, Plant and Equipment

Recognition and measurement of tangible assets

144
Q

What is IAS 19?

A

Employee Benefits

Accounting for post-employment and other employee benefits

145
Q

What is IAS 20?

A

Accounting for Government Grants and Disclosure of Government Assistance

Recognition of grants and related disclosures

146
Q

What is IAS 21?

A

The Effects of Changes in Foreign Exchange Rates

Foreign currency transactions and translation

147
Q

What is IAS 23?

A

Borrowing Costs

Capitalization of borrowing costs during asset construction

148
Q

What is IAS 24?

A

Related Party Disclosures

Transparency in transactions with related parties

149
Q

What is IAS 27?

A

Separate Financial Statements

Accounting for investments in subsidiaries, joint ventures, and associates

150
Q

What is IAS 28?

A

Investments in Associates and Joint Ventures

Equity method of accounting for investments

151
Q

What is IAS 29?

A

Financial Reporting in Hyperinflationary Economies

Adjusting financial statements for hyperinflation

152
Q

What is IAS 32?

A

Financial Instruments: Presentation

Classification of financial instruments as liabilities or equity

153
Q

What is IAS 33?

A

Earnings per Share

Calculation and presentation of EPS

154
Q

What is IAS 34?

A

Interim Financial Reporting

Requirements for reporting financial information for interim periods

155
Q

What is IAS 36?

A

Impairment of Assets

Assessing recoverable amounts of assets

156
Q

What is IAS 37?

A

Provisions, Contingent Liabilities and Contingent Assets

Recognition and measurement of provisions

157
Q

What is IAS 38?

A

Intangible Assets

Recognition, measurement, and amortization of intangible assets

158
Q

What is IAS 40?

A

Investment Property

Accounting for property held for rental or capital appreciation

159
Q

What is IASB?

A

International Accounting Standards Board

Body responsible for developing and issuing IFRS

160
Q

What is the IASB Conceptual Framework?

A

Framework for financial reporting

Underlying principles for preparing financial statements

161
Q

What is the IASB Website?

A

Official site for the IASB

Access to standards, updates, and resources

162
Q

What is an Identifiable Asset?

A

Asset that can be separated from the entity

Recognition in business combinations

163
Q

What is the Identification of Financial Statements?

A

Process of determining the components of financial statements

Ensuring clarity and consistency

164
Q

What is IFRS 1?

A

First-time Adoption of International Financial Reporting Standards

Guidelines for transitioning to IFRS

165
Q

What is IFRS 2?

A

Share-based Payment

Accounting for equity-settled and cash-settled share-based payments

166
Q

What is IFRS 3?

A

Business Combinations

Accounting for mergers and acquisitions

167
Q

What is IFRS 5?

A

Non-current Assets Held for Sale and Discontinued Operations

Criteria for classification and measurement

168
Q

What is IFRS 7?

A

Financial Instruments: Disclosures

Transparency in financial instrument risks

169
Q

What is IFRS 8?

A

Operating Segments

Reporting based on internal management structure

170
Q

What is IFRS 9?

A

Financial Instruments

Classification, measurement, and impairment of financial assets

171
Q

What is IFRS 10?

A

Consolidated Financial Statements

Control over subsidiaries

172
Q

What is IFRS 11?

A

Joint Arrangements

Joint control and joint operations

173
Q

What is IFRS 12?

A

Disclosure of Interests in Other Entities

Transparency in investments

174
Q

What is IFRS 13?

A

Fair Value Measurement

Framework for measuring fair value

175
Q

What is IFRS 15?

A

Revenue from Contracts with Customers

Performance obligations and revenue recognition

176
Q

What is IFRS 16?

A

Leases

Recognition of lease liabilities and assets

177
Q

What are IFRS Accounting Standards?

A

Set of standards for financial reporting

Consistency and comparability in financial statements

178
Q

What is the IFRS Advisory Council?

A

Body providing advice to the IFRS Foundation

Stakeholder engagement in standard-setting

179
Q

What is IFRS for SMEs?

A

International Financial Reporting Standard for Small and Medium-sized Entities

Simplified reporting requirements

180
Q

What is the IFRS Foundation?

A

Organization overseeing the development of IFRS

Promoting global financial reporting standards

181
Q

What is the IFRS Interpretations Committee?

A

Group interpreting IFRS standards

Clarifying application of standards

182
Q

What are IFRS Sustainability Disclosure Standards?

A

Standards for sustainability reporting

Enhancing transparency in sustainability practices

183
Q

What is the Impairment of Assets?

A

Reducing the carrying amount of an asset

Assessing recoverable amounts

184
Q

What is Income?

A

Earnings generated from operations

Revenue recognition principles

185
Q

What is the Indirect Method?

A

Cash flow statement preparation method

Adjusting net income for non-cash items

186
Q

What are Intangible Assets?

A

Non-physical assets with economic value

Recognition and measurement criteria

187
Q

What is Interest Cost?

A

Expense incurred on borrowed funds

Capitalizing interest during asset construction

188
Q

What is Interest Cover?

A

Ratio measuring ability to pay interest

Earnings before interest and taxes (EBIT) divided by interest expense

189
Q

What is Interest Income?

A

Earnings from interest-bearing assets

Recognized based on effective interest rate

190
Q

What is Interest Rate Risk?

A

Risk of changes in interest rates affecting financial performance

Managing exposure through hedging

191
Q

What is Interim Financial Reporting?

A

Financial reporting for periods shorter than a year

Providing timely financial information

192
Q

What is an Internally Generated Intangible Asset?

A

Intangible asset developed within the company

Criteria for recognition and measurement

193
Q

What are International Accounting Standards?

A

Predecessors to IFRS

Historical framework for financial reporting

194
Q

What is the International Accounting Standards Board?

A

Body responsible for developing IFRS

Setting global accounting standards

195
Q

What are International Financial Reporting Standards?

A

Set of accounting standards for financial reporting

Enhancing transparency and comparability

196
Q

What is the International Sustainability Standards Board?

A

Board developing sustainability reporting standards

Promoting global sustainability disclosures

197
Q

What are Interpretations?

A

Clarifications of IFRS standards

Ensuring consistent application

198
Q

What are Intra-group Items?

A

Transactions between group entities

Eliminating in consolidated financial statements

199
Q

What are Inventories?

A

Goods available for sale

Valuation methods (FIFO, LIFO)

200
Q

What is the Inventory Holding Period?

A

Time inventory is held before sale

Efficiency in inventory management

201
Q

What are Investing Activities?

A

Cash flows from acquisition and disposal of assets

Long-term investment decisions

202
Q

What is Investment Property?

A

Property held for rental income or capital appreciation

Measurement at fair value or cost

203
Q

What are Investment Ratios?

A

Ratios assessing investment performance

Return on investment (ROI) and others

204
Q

What are Joint Arrangements?

A

Arrangements where two or more parties have joint control

Joint operations and joint ventures

205
Q

What is Joint Control?

A

Contractual agreement to share control of an arrangement

Decision-making rights shared among parties

206
Q

What are Joint Operations?

A

Joint arrangements where parties have rights to assets and obligations for liabilities

Recognizing assets, liabilities, and revenue

207
Q

What are Joint Ventures?

A

Joint arrangements where parties have rights to the net assets

Equity method of accounting

208
Q

What is Last-in, First-out (LIFO)?

A

Inventory valuation method

Most recently acquired items are sold first

209
Q

What is Lease Liability?

A

Obligation to make lease payments

Present value of future lease payments

210
Q

What are Leases?

A

Contracts allowing use of an asset for a specified period

Classification as operating or finance lease

211
Q

What is a Liability?

A

Present obligations arising from past events

Settled through outflows of resources

212
Q

What are Liquidity Ratios?

A

Measures of a company’s ability to meet short-term obligations

Current ratio and quick ratio

213
Q

What is Liquidity Risk?

A

Risk of being unable to meet short-term financial obligations

Managing cash flow and access to funding

214
Q

What are Long-term Employee Benefits?

A

Employee benefits payable after more than 12 months

Accounting for post-employment benefits

215
Q

What is a Low-value Asset?

A

Asset with a low cost that can be expensed immediately

Simplified accounting treatment

216
Q

What is Management Commentary?

A

Narrative report accompanying financial statements

Providing context and insights into performance

217
Q

What is Market Risk?

A

Risk of losses due to market fluctuations

Managing exposure to price changes

218
Q

What is Materiality?

A

Importance of information in financial reporting

Influencing decisions of users

219
Q

What is Measurement of an Element?

A

Process of determining the monetary amounts at which elements are recognized

Historical cost vs. fair value

220
Q

What is a Monetary Asset?

A

Asset that represents a fixed amount of currency

Cash and receivables

221
Q

What are Monetary Items?

A

Assets and liabilities that are fixed in terms of currency

Impact of inflation on monetary items

222
Q

What is Multivariate Ratio Analysis?

A

Analysis using multiple financial ratios

Comprehensive assessment of financial health

223
Q

What is Negative Goodwill?

A

Excess of fair value of net assets acquired over purchase price

Recognized as a gain in financial statements

224
Q

What is Net Investment in Lease?

A

Lessee’s investment in a lease

Present value of lease payments

225
Q

What is Net Realisable Value?

A

Estimated selling price of an asset minus costs to sell

Valuation of inventories and receivables

226
Q

What is Neutrality?

A

Financial reporting should be free from bias

Fair representation of financial position

227
Q

What is a Non-adjusting Event?

A

Event occurring after the reporting period that does not affect financial statements

Disclosure requirements

228
Q

What is a Non-controlling Interest?

A

Equity in a subsidiary not attributable to the parent

Reporting in consolidated financial statements

229
Q

What are Non-current Assets?

A

Long-term assets not expected to be converted to cash within a year

Property, plant, and equipment

230
Q

What are Non-current Assets Held for Sale?

A

Assets expected to be sold rather than used

Measurement at the lower of carrying amount or fair value

231
Q

What are Non-current Liabilities?

A

Obligations not due within one year

Long-term debt and deferred tax liabilities

232
Q

What is a Non-monetary Asset?

A

Asset that does not have a fixed monetary value

Includes intangible assets and property

233
Q

What are Notes to the Financial Statements?

A

Additional information provided alongside financial statements

Enhancing understanding of financial data

234
Q

What is the Objective of Financial Reporting?

A

To provide useful financial information to users

Supporting decision-making processes

235
Q

What is the Objective of Financial Statements?

A

To present the financial position and performance of an entity

Transparency and accountability

236
Q

What is an Obligating Event?

A

Event that creates a legal or constructive obligation

Recognition of liabilities

237
Q

What is an Obligation?

A

A duty or commitment to settle a liability

Future outflows of resources

238
Q

What is Offsetting?

A

Reducing the value of an asset or liability by the amount of another

Net presentation in financial statements

239
Q

What is an Onerous Contract?

A

Contract where costs exceed benefits

Recognizing liabilities for expected losses

240
Q

What are Operating Activities?

A

Cash flows from primary revenue-generating activities

Day-to-day business operations

241
Q

What is an Operating Lease?

A

Lease not classified as a finance lease

Short-term rental agreements

242
Q

What are Operating Segments?

A

Components of an entity engaged in business activities

Reporting performance of different segments

243
Q

What is the Operating Profit Margin?

A

Ratio measuring operating profit as a percentage of revenue

Efficiency of core business operations

244
Q

What is Operating Profit?

A

Profit from operations before interest and taxes

Indicator of operational efficiency

245
Q

What are Options?

A

Financial derivatives giving the right to buy or sell an asset

Hedging and speculation strategies

246
Q

What is Other Comprehensive Income?

A

Income not included in net profit

Items like foreign currency translation adjustments

247
Q

What is a Parent?

A

Entity that controls one or more subsidiaries

Consolidation of financial statements

248
Q

What is the Payables Payment Period?

A

Average time taken to pay suppliers

Managing cash flow and supplier relationships

249
Q

What is a Performance Obligation?

A

A promise in a contract to transfer a good or service

Revenue recognition criteria

250
Q

What is a Permanent Difference?

A

Differences between taxable income and accounting income that will not reverse

Impact on effective tax rate

251
Q

What is Physical Capital Maintenance?

A

Maintaining the physical capacity of an entity

Ensuring sustainability of operations

252
Q

What are Post-employment Benefits?

A

Benefits provided to employees after employment ends

Accounting for pensions and other retirement benefits

253
Q

What are Preference Shares?

A

Shares with preferential rights over ordinary shares

Fixed dividends and priority in liquidation

254
Q

What is a Present Obligation?

A

A duty or responsibility that an entity has to transfer economic benefits to another party.

255
Q

What is Present Value?

A

The current worth of a future sum of money or stream of cash flows, discounted at a specific interest rate.

256
Q

What is Presentation Currency?

A

The currency in which the financial statements are presented.

257
Q

What is the Presentation of Financial Statements?

A

The structured format in which financial information is disclosed to users.

258
Q

What is the Price Earnings Ratio?

A

A valuation ratio calculated by dividing the current share price by the earnings per share.

259
Q

What are Prior Period Errors?

A

Mistakes in financial statements from previous periods that are corrected in the current period.

260
Q

What are Profitability Ratios?

A

Metrics used to assess a company’s ability to generate profit relative to its revenue, assets, or equity.

261
Q

What is Profit from Operations?

A

The income generated from normal business operations, excluding any income derived from non-operational activities.

262
Q

What is Profit Margin?

A

A financial metric that shows the percentage of revenue that exceeds the costs of goods sold.

263
Q

What are Prompt Payment Discounts?

A

Discounts offered to customers for paying their invoices early.

264
Q

What is Property, Plant and Equipment?

A

Tangible fixed assets used in the production of goods and services.

265
Q

What are Provisions?

A

Liabilities of uncertain timing or amount, recognized when an entity has a present obligation.

266
Q

What is Prudence in accounting?

A

The accounting principle that requires caution in financial reporting, ensuring that assets and income are not overstated.

267
Q

What is Purchasing Power?

A

The value of money in terms of the quantity of goods or services it can buy.

268
Q

What are Qualitative Characteristics?

A

Attributes that make financial information useful, including relevance and reliability.

269
Q

What is the Quick Ratio?

A

A liquidity ratio that measures a company’s ability to meet short-term obligations with its most liquid assets.

270
Q

What is Ratio Analysis?

A

The use of financial ratios to evaluate a company’s performance and financial health.

271
Q

What is the Receivables Collection Period?

A

The average time taken to collect payments from customers.

272
Q

What is Reclassification to Profit or Loss?

A

The process of moving amounts from other comprehensive income to profit or loss.

273
Q

What is Recognition of an Element?

A

The process of formally recording an item in the financial statements.

274
Q

What is Recoverable Amount?

A

The higher of an asset’s fair value less costs to sell and its value in use.

275
Q

What are Redeemable Preference Shares?

A

Shares that can be redeemed by the company at a future date.

276
Q

What is the Reducing Balance Method?

A

An accelerated depreciation method that applies a constant rate to the declining book value of an asset.

277
Q

What is a Regulatory Framework?

A

The set of rules and guidelines that govern financial reporting and accounting practices.

278
Q

What are Related Parties?

A

Entities that have a relationship that could influence the financial and operating decisions of each other.

279
Q

What is Relevance in financial information?

A

The quality of information that makes it useful for decision-making.

280
Q

What is Reliability in financial reporting?

A

The assurance that financial information is accurate and can be depended upon.

281
Q

What is a Reportable Segment?

A

A component of an entity that engages in business activities and is evaluated regularly by management.

282
Q

What is a Repurchase Agreement?

A

A financial transaction in which one party sells an asset and agrees to repurchase it later at a specified price.

283
Q

What is Research Expenditure?

A

Costs incurred in the investigation of new products or processes.

284
Q

What is Residual Value?

A

The estimated value of an asset at the end of its useful life.

285
Q

What are Restructuring Costs?

A

Expenses associated with reorganizing a company’s operations.

286
Q

What is Retrospective Application?

A

The application of a new accounting policy to prior periods as if it had always been in effect.

287
Q

What is Retrospective Correction?

A

The correction of an error in prior financial statements.

288
Q

What is Return on Capital Employed?

A

A financial ratio that measures a company’s profitability and the efficiency with which its capital is employed.

289
Q

What is Return on Equity?

A

A measure of financial performance calculated by dividing net income by shareholders’ equity.

290
Q

What is Return on Plan Assets?

A

The expected return on assets held in a pension plan.

291
Q

What are Returns?

A

The income generated from investments or sales.

292
Q

What are Revaluation Gains?

A

Increases in the value of an asset when it is revalued.

293
Q

What are Revaluation Losses?

A

Decreases in the value of an asset when it is revalued.

294
Q

What is the Revaluation Model?

A

An accounting method that allows assets to be carried at fair value.

295
Q

What is Revenue?

A

The income generated from normal business operations.

296
Q

What is a Right-of-Use Asset?

A

An asset that represents a lessee’s right to use an underlying asset for the lease term.

297
Q

What are Rights Issues?

A

Offers to existing shareholders to purchase additional shares at a specified price.

298
Q

What is Sale and Leaseback?

A

A financial transaction where an asset is sold and then leased back from the buyer.

299
Q

What is Segmental Analysis?

A

The breakdown of financial information by different segments of a business.

300
Q

What is a Separable Asset?

A

An asset that can be sold or transferred independently from other assets.

301
Q

What is a Separately Acquired Intangible Asset?

A

An intangible asset that is purchased separately from other assets.

302
Q

What is Share-Based Payment?

A

Compensation given to employees in the form of shares or share options.

303
Q

What are Short-Term Employee Benefits?

A

Benefits that are expected to be settled within 12 months.

304
Q

What is a Short-Term Lease?

A

A lease with a term of 12 months or less.

305
Q

What is Significant Influence?

A

The power to participate in financial and operating policy decisions of an entity.

306
Q

What are Small and Medium-Sized Entities?

A

Businesses that meet specific criteria regarding size and revenue.

307
Q

What is the Statement of Cash Flows?

A

A financial statement that shows the cash inflows and outflows over a period.

308
Q

What is the Statement of Changes in Equity?

A

A financial statement that outlines changes in equity from transactions with owners.

309
Q

What is the Statement of Comprehensive Income?

A

A financial statement that includes all income and expenses, including those not recognized in profit or loss.

310
Q

What is the Statement of Financial Position?

A

A financial statement that provides a snapshot of an entity’s assets, liabilities, and equity at a specific point in time.

311
Q

What is the Statement of Income and Retained Earnings?

A

A financial statement that shows the income earned and the retained earnings over a period.

312
Q

What is the Statement of Profit or Loss?

A

A financial statement that summarizes revenues and expenses to show net profit or loss.

313
Q

What is the Statement of Profit or Loss and Other Comprehensive Income?

A

A combined statement that includes profit or loss and other comprehensive income.

314
Q

What is Stewardship?

A

The responsibility of managing and safeguarding an entity’s resources.

315
Q

What is the Straight-Line Method?

A

A method of depreciation that allocates an equal amount of depreciation expense each year.

316
Q

What is a Subsidiary?

A

A company controlled by another company, known as the parent company.

317
Q

What is Substance Over Form?

A

An accounting principle that emphasizes the economic reality of transactions over their legal form.

318
Q

What is Tax Base?

A

The amount attributed to an asset or liability for tax purposes.

319
Q

What is Taxation?

A

The process of levying taxes on income, property, or goods.

320
Q

What is a Temporary Difference?

A

A difference between the carrying amount of an asset or liability and its tax base.

321
Q

What are Termination Benefits?

A

Compensation provided to employees upon termination of their employment.

322
Q

What is Timeliness in financial information?

A

The quality of information being available to decision-makers in time to be useful.

323
Q

What are Trade Payables?

A

Amounts owed to suppliers for goods and services received.

324
Q

What are Trade Receivables?

A

Amounts owed by customers for goods and services sold.

325
Q

What is Transaction Price?

A

The amount of consideration to which an entity expects to be entitled in exchange for transferring goods or services.

326
Q

What is the UK Endorsement Board?

A

The body responsible for endorsing International Financial Reporting Standards in the UK.

327
Q

What is an Underlying Asset?

A

The asset that is the subject of a financial instrument or transaction.

328
Q

What is Understandability in financial information?

A

The quality of information that makes it comprehensible to users.

329
Q

What is the Units of Production Method?

A

A method of depreciation based on the actual usage of an asset.

330
Q

What are Unrealised Profits?

A

Profits that have not yet been realized through a sale or transaction.

331
Q

What is the Unwinding of Discount?

A

The process of recognizing the passage of time on a discounted liability.

332
Q

What is an Upstream Transaction?

A

A transaction where a subsidiary sells goods or services to its parent company.

333
Q

What is Useful Life?

A

The period over which an asset is expected to be used.

334
Q

Who are the Users of Financial Statements?

A

Individuals or entities that rely on financial statements for decision-making.

335
Q

What is Value in Use?

A

The present value of the future cash flows expected to be derived from an asset.

336
Q

What is a Venturer?

A

A party to a joint venture that shares control over the venture.

337
Q

What is Verifiability in financial information?

A

The quality of information that enables users to confirm its accuracy.

338
Q

What are Warranties?

A

Promises made by a seller regarding the condition of a product.

339
Q

What is Weighted Average Cost (AVCO)?

A

An inventory valuation method that averages the cost of all similar items.

aa (5 decks)

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