Financial Accounting Glossary Flashcards
1
Q
What are Accounting Estimates?
A
Approximations made in financial reporting to account for uncertainties in financial data.
2
Q
What are Accounting Policies?
A
Specific principles, bases, conventions, rules, and practices applied by an entity in preparing its financial statements.
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.
4
Q
What are Accounting Standards?
A
Guidelines and rules that govern how financial statements are prepared and presented.
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.
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.
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.
8
Q
What is Aggregation?
A
The process of combining multiple financial data points into a single summary figure.
9
Q
What is Amortisation?
A
The gradual reduction of an intangible asset’s value over time through systematic charges to expense.
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.
11
Q
What is an Asset?
A
A resource controlled by an entity that is expected to provide future economic benefits.
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.
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.
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.
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.
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.
17
Q
What are Borrowing Costs?
A
Interest and other costs incurred by an entity in connection with borrowing funds.
18
Q
What are Business Combinations?
A
Transactions in which an acquirer obtains control of one or more businesses.
19
Q
What is Capital?
A
Financial assets or resources that companies use to fund their operations and growth.
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.
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.
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.
23
Q
What is Cash?
A
Liquid assets that are readily available for use in transactions.
24
Q
What is Cash Equivalent?
A
Short-term investments that are easily convertible to cash with minimal risk of value changes.
25
What is a Cash-Generating Unit?
The smallest identifiable group of assets that generates cash inflows independently of other assets.
26
What is Comparability?
The quality of financial information that allows users to identify similarities and differences between two sets of financial statements.
27
What is Comparative Information?
Financial data presented for previous periods to provide context for current financial statements.
28
What is Completeness?
The principle that all necessary information must be included in financial statements to provide a true and fair view.
29
What is Compliance with Standards?
Adherence to established accounting standards and regulations in financial reporting.
30
What are Components of Equity?
The various elements that make up an entity's equity, including share capital, retained earnings, and other reserves.
31
What are Components of Financial Statements?
The individual parts that make up financial statements, such as the income statement, balance sheet, and cash flow statement.
32
What are Compound Financial Instruments?
Financial instruments that have characteristics of both debt and equity.
33
What is Comprehensive Income?
The total change in equity from non-owner sources, including all revenues, expenses, gains, and losses.
34
What is a Conceptual Framework?
A set of interrelated objectives and fundamentals that guide the preparation and presentation of financial statements.
35
What are Condensed Financial Statements?
Summarized financial statements that provide a less detailed view of a company's financial position and performance.
36
What is Consistency?
The principle that a company should use the same accounting methods and policies from one period to the next.
37
What are Consolidated Financial Statements?
Financial statements that present the financial position and performance of a parent company and its subsidiaries as a single entity.
38
What is a Constructive Obligation?
An obligation that derives from an entity's actions, indicating to other parties that it will accept certain responsibilities.
39
What is a Contingent Asset?
A potential asset that may arise from future events, whose existence is uncertain.
40
What is a Contingent Liability?
A potential obligation that may arise depending on the outcome of a future event.
41
What are Contracts with Customers?
Agreements that outline the terms of sales and services provided to customers.
42
What is Control?
The power to govern the financial and operating policies of an entity to obtain benefits from its activities.
43
What are Conversion Costs?
Costs incurred to convert raw materials into finished goods, including labor and overhead.
44
What are Corporate Assets?
Assets that are owned by a corporation and used in its operations.
45
What are Cost Formulas?
Methods used to determine the cost of inventory, such as FIFO (First In, First Out) or LIFO (Last In, First Out).
46
What is a Cost Model?
An accounting model that values assets at their historical cost less any accumulated depreciation and impairment.
47
What is Credit Risk?
The risk of loss due to a borrower's failure to repay a loan or meet contractual obligations.
48
What is Currency Risk?
The risk of financial loss due to fluctuations in exchange rates.
49
What are Current Assets?
Assets that are expected to be converted into cash or used up within one year.
50
What is Current Cost?
The cost of an asset based on its current replacement value.
51
What is Current Cost Accounting?
An accounting method that adjusts financial statements to reflect current costs rather than historical costs.
52
What are Current Liabilities?
Obligations that are expected to be settled within one year.
53
What is Current Purchasing Power Accounting?
An accounting method that adjusts financial statements for changes in the general price level.
54
What is Current Ratio?
A liquidity ratio that measures a company's ability to pay short-term obligations with its current assets.
55
What is Current Service Cost?
The increase in the present value of a defined benefit obligation resulting from employee service in the current period.
56
What is Current Tax?
The amount of income tax payable (or recoverable) in respect of the taxable profit (or loss) for the current period.
57
What is Current Value?
The value of an asset or liability at the current date, reflecting current market conditions.
58
What is Date of Transition?
The date on which an entity adopts a new accounting standard.
59
What is Deferred Tax?
Taxes that are assessed but not yet paid, often due to timing differences between accounting and tax treatment.
60
What is Defined Benefit Obligation?
The present value of expected future payments required to settle a defined benefit plan's obligations.
61
What is a Defined Benefit Plan?
A retirement plan where an employer guarantees a specific retirement benefit amount based on a formula.
62
What is a Defined Contribution Plan?
A retirement plan where the employer, employee, or both make contributions, and the final benefit depends on investment performance.
63
What is Depreciable Amount?
The cost of an asset minus its residual value, which is allocated as an expense over the asset's useful life.
64
What is Depreciation?
The systematic allocation of the depreciable amount of an asset over its useful life.
65
What is Development Expenditure?
Costs incurred in the development phase of a project, which may be capitalized if certain criteria are met.
66
What is Diluted Earnings Per Share?
A measure of a company's profitability that accounts for all potential shares that could be created through convertible securities.
67
What is Diminishing Balance Method?
A method of calculating depreciation where a fixed percentage is applied to the carrying amount of the asset each year.
68
What is Direct Method?
A method of preparing the cash flow statement that lists cash inflows and outflows directly.
69
What are Discontinued Operations?
Parts of a business that have been sold or are being shut down, which are reported separately in financial statements.
70
What is Discounting?
The process of determining the present value of future cash flows by applying a discount rate.
71
What is a Disposal Group?
A group of assets and liabilities that are to be disposed of together as a single transaction.
72
What is Dividend Cover?
A ratio that indicates how many times a company can pay dividends to its shareholders from its net income.
73
What is Dividend Yield?
A financial ratio that shows how much a company pays in dividends each year relative to its stock price.
74
What are Dividends?
Payments made by a corporation to its shareholders, usually as a distribution of profits.
75
What is a Downstream Transaction?
A transaction where an entity sells goods or services to its subsidiaries or associates.
76
What is Earnings Per Share (EPS)?
A measure of a company's profitability calculated by dividing net income by the number of outstanding shares.
77
What is the Effective Interest Method?
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.
78
What are Efficiency Ratios?
Financial metrics that assess how effectively a company utilizes its assets and manages its operations.
79
What are the Elements of Financial Statements?
The fundamental components that make up financial statements, including assets, liabilities, equity, income, and expenses.
80
What are Employee Benefits?
Compensation provided to employees in addition to their regular salaries, including pensions, health insurance, and other perks.
81
What are Enhancing Characteristics?
Qualities that improve the usefulness of financial information, such as comparability, verifiability, timeliness, and understandability.
82
What is an Entity?
A legal or economic unit that engages in business activities and can enter into contracts.
83
What is Equity?
The residual interest in the assets of an entity after deducting liabilities; represents ownership in the company.
84
What is an Equity Instrument?
A financial instrument that represents an ownership interest in an entity, such as shares of stock.
85
What is the Equity Method?
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.
86
What are Errors in financial statements?
Mistakes in financial statements that arise from mathematical mistakes, mistakes in applying accounting policies, or oversight.
87
What are Estimates in financial reporting?
Approximations made in financial reporting to account for uncertainties in financial data.
88
What is Estimation Uncertainty?
The risk that the actual outcomes will differ from the estimates used in financial reporting.
89
What are Events After the Reporting Period?
Significant occurrences that happen after the end of the reporting period but before the financial statements are issued.
90
What are Exchange Differences?
Variations in the value of foreign currency transactions due to changes in exchange rates.
91
What is Expected Value?
A calculated average of all possible outcomes, weighted by their probabilities, often used in decision-making.
92
What are Expenses?
Costs incurred by a business in the process of generating revenue.
93
What is an Exposure Draft?
A document released by standard-setting bodies to solicit public comments on proposed accounting standards.
94
What are Extraordinary Items?
Unusual and infrequent events that have a significant impact on a company's financial results.
95
What is Fair Presentation?
The requirement that financial statements present a true and fair view of the entity's financial position and performance.
96
What is Fair Value?
The estimated price at which an asset could be bought or sold in a current transaction between willing parties.
97
What is Fair Value Less Costs of Disposal?
The fair value of an asset minus the costs associated with selling it.
98
What is Fair Value Less Costs to Sell?
Similar to the above, this refers to the fair value of an asset after deducting selling costs.
99
What is the Fair Value Model?
An accounting approach that measures assets and liabilities at their fair value rather than historical cost.
100
What is Fair Value Through OCI?
A classification for financial assets where changes in fair value are recognized in other comprehensive income.
101
What is Fair Value Through Profit or Loss?
A classification for financial assets where changes in fair value are recognized in profit or loss.
102
What is Faithful Representation?
The principle that financial information should accurately reflect the economic phenomena it purports to represent.
103
What is FASB?
An independent organization that establishes financial accounting and reporting standards in the U.S.
104
What is a Finance Lease?
A lease that transfers substantially all the risks and rewards of ownership of an asset to the lessee.
105
What is a Financial Asset?
Any asset that is cash, an equity instrument of another entity, or a contractual right to receive cash or another financial asset.
106
What is Financial Capital Maintenance?
The concept that a company must maintain its capital to ensure it can continue operations and meet obligations.
107
What are Financial Instruments?
Contracts that create financial assets for one entity and financial liabilities or equity instruments for another.
108
What is a Financial Liability?
A contractual obligation to deliver cash or another financial asset to another entity.
109
What is Financial Reporting?
The process of providing financial information to various stakeholders to aid in decision-making.
110
What are Financial Statements?
Structured reports that summarize the financial performance and position of an entity.
111
What are Financing Activities?
Transactions that result in changes in the size and composition of the equity and borrowings of the entity.
112
What is First-in, First-out (FIFO)?
An inventory valuation method where the oldest inventory items are recorded as sold first.
113
What is First-time Adoption?
The initial application of a new accounting standard by an entity.
114
What are Fixed Production Overheads?
Costs that do not change with the level of production, such as rent and salaries of production staff.
115
What are Foreign Currency Transactions?
Transactions that are denominated in a currency other than the entity's functional currency.
116
What are Foreign Operations?
Business activities conducted in a country other than the entity's home country.
117
What is Functional Currency?
The currency of the primary economic environment in which an entity operates.
118
What are Fundamental Characteristics?
The essential qualities that make financial information useful, including relevance and faithful representation.
119
What is GAAP?
A framework of accounting standards, principles, and procedures used in financial reporting.
120
What is the Gearing Ratio?
A financial ratio that compares a company's debt to its equity, indicating financial leverage.
121
What is Going Concern?
The assumption that an entity will continue to operate for the foreseeable future.
122
What is Goodwill?
An intangible asset that arises when a company acquires another company for more than the fair value of its net identifiable assets.
123
What are Government Grants?
Financial assistance provided by the government to support specific activities or projects.
124
What is Gross Profit Margin?
A profitability ratio that shows the percentage of revenue that exceeds the cost of goods sold.
125
What is a Group?
A collection of entities that are controlled by a parent company.
126
What are Group Financial Statements?
Financial statements that present the financial position and performance of a group of companies as a single entity.
127
What is Historical Cost?
The original monetary value of an asset at the time of acquisition.
128
What is Historical Cost Accounting?
An accounting method that records assets and liabilities at their original purchase price.
129
What are Holding Gains?
Increases in the value of an asset that are not realized until the asset is sold.
130
What are Hyperinflationary Economies?
Economies experiencing extremely high and typically accelerating inflation rates.
131
What are IAS?
Standards issued by the International Accounting Standards Committee, which were replaced by IFRS.
132
What is IASB?
The independent body responsible for developing and promoting International Financial Reporting Standards (IFRS).
133
What is the IASB Conceptual Framework?
A set of concepts that guide the development of accounting standards and the preparation of financial statements.
134
What is an Identifiable Asset?
An asset that can be separated from the entity and sold, transferred, licensed, rented, or exchanged.
135
What is the Identification of Financial Statements?
The process of recognizing and categorizing financial statements for reporting purposes.
136
What are IFRS?
Standards developed by the IASB that govern financial reporting internationally.
137
What is IAS 1?
Presentation of Financial Statements
## Footnote
Framework for presenting financial information
138
What is IAS 2?
Inventories
## Footnote
Valuation and cost flow assumptions
139
What is IAS 7?
Statement of Cash Flows
## Footnote
Reporting cash inflows and outflows
140
What is IAS 8?
Accounting Policies, Changes in Accounting Estimates and Errors
## Footnote
Consistency in accounting practices
141
What is IAS 10?
Events After the Reporting Period
## Footnote
Recognizing and disclosing subsequent events
142
What is IAS 12?
Income Taxes
## Footnote
Accounting for current and deferred tax
143
What is IAS 16?
Property, Plant and Equipment
## Footnote
Recognition and measurement of tangible assets
144
What is IAS 19?
Employee Benefits
## Footnote
Accounting for post-employment and other employee benefits
145
What is IAS 20?
Accounting for Government Grants and Disclosure of Government Assistance
## Footnote
Recognition of grants and related disclosures
146
What is IAS 21?
The Effects of Changes in Foreign Exchange Rates
## Footnote
Foreign currency transactions and translation
147
What is IAS 23?
Borrowing Costs
## Footnote
Capitalization of borrowing costs during asset construction
148
What is IAS 24?
Related Party Disclosures
## Footnote
Transparency in transactions with related parties
149
What is IAS 27?
Separate Financial Statements
## Footnote
Accounting for investments in subsidiaries, joint ventures, and associates
150
What is IAS 28?
Investments in Associates and Joint Ventures
## Footnote
Equity method of accounting for investments
151
What is IAS 29?
Financial Reporting in Hyperinflationary Economies
## Footnote
Adjusting financial statements for hyperinflation
152
What is IAS 32?
Financial Instruments: Presentation
## Footnote
Classification of financial instruments as liabilities or equity
153
What is IAS 33?
Earnings per Share
## Footnote
Calculation and presentation of EPS
154
What is IAS 34?
Interim Financial Reporting
## Footnote
Requirements for reporting financial information for interim periods
155
What is IAS 36?
Impairment of Assets
## Footnote
Assessing recoverable amounts of assets
156
What is IAS 37?
Provisions, Contingent Liabilities and Contingent Assets
## Footnote
Recognition and measurement of provisions
157
What is IAS 38?
Intangible Assets
## Footnote
Recognition, measurement, and amortization of intangible assets
158
What is IAS 40?
Investment Property
## Footnote
Accounting for property held for rental or capital appreciation
159
What is IASB?
International Accounting Standards Board
## Footnote
Body responsible for developing and issuing IFRS
160
What is the IASB Conceptual Framework?
Framework for financial reporting
## Footnote
Underlying principles for preparing financial statements
161
What is the IASB Website?
Official site for the IASB
## Footnote
Access to standards, updates, and resources
162
What is an Identifiable Asset?
Asset that can be separated from the entity
## Footnote
Recognition in business combinations
163
What is the Identification of Financial Statements?
Process of determining the components of financial statements
## Footnote
Ensuring clarity and consistency
164
What is IFRS 1?
First-time Adoption of International Financial Reporting Standards
## Footnote
Guidelines for transitioning to IFRS
165
What is IFRS 2?
Share-based Payment
## Footnote
Accounting for equity-settled and cash-settled share-based payments
166
What is IFRS 3?
Business Combinations
## Footnote
Accounting for mergers and acquisitions
167
What is IFRS 5?
Non-current Assets Held for Sale and Discontinued Operations
## Footnote
Criteria for classification and measurement
168
What is IFRS 7?
Financial Instruments: Disclosures
## Footnote
Transparency in financial instrument risks
169
What is IFRS 8?
Operating Segments
## Footnote
Reporting based on internal management structure
170
What is IFRS 9?
Financial Instruments
## Footnote
Classification, measurement, and impairment of financial assets
171
What is IFRS 10?
Consolidated Financial Statements
## Footnote
Control over subsidiaries
172
What is IFRS 11?
Joint Arrangements
## Footnote
Joint control and joint operations
173
What is IFRS 12?
Disclosure of Interests in Other Entities
## Footnote
Transparency in investments
174
What is IFRS 13?
Fair Value Measurement
## Footnote
Framework for measuring fair value
175
What is IFRS 15?
Revenue from Contracts with Customers
## Footnote
Performance obligations and revenue recognition
176
What is IFRS 16?
Leases
## Footnote
Recognition of lease liabilities and assets
177
What are IFRS Accounting Standards?
Set of standards for financial reporting
## Footnote
Consistency and comparability in financial statements
178
What is the IFRS Advisory Council?
Body providing advice to the IFRS Foundation
## Footnote
Stakeholder engagement in standard-setting
179
What is IFRS for SMEs?
International Financial Reporting Standard for Small and Medium-sized Entities
## Footnote
Simplified reporting requirements
180
What is the IFRS Foundation?
Organization overseeing the development of IFRS
## Footnote
Promoting global financial reporting standards
181
What is the IFRS Interpretations Committee?
Group interpreting IFRS standards
## Footnote
Clarifying application of standards
182
What are IFRS Sustainability Disclosure Standards?
Standards for sustainability reporting
## Footnote
Enhancing transparency in sustainability practices
183
What is the Impairment of Assets?
Reducing the carrying amount of an asset
## Footnote
Assessing recoverable amounts
184
What is Income?
Earnings generated from operations
## Footnote
Revenue recognition principles
185
What is the Indirect Method?
Cash flow statement preparation method
## Footnote
Adjusting net income for non-cash items
186
What are Intangible Assets?
Non-physical assets with economic value
## Footnote
Recognition and measurement criteria
187
What is Interest Cost?
Expense incurred on borrowed funds
## Footnote
Capitalizing interest during asset construction
188
What is Interest Cover?
Ratio measuring ability to pay interest
## Footnote
Earnings before interest and taxes (EBIT) divided by interest expense
189
What is Interest Income?
Earnings from interest-bearing assets
## Footnote
Recognized based on effective interest rate
190
What is Interest Rate Risk?
Risk of changes in interest rates affecting financial performance
## Footnote
Managing exposure through hedging
191
What is Interim Financial Reporting?
Financial reporting for periods shorter than a year
## Footnote
Providing timely financial information
192
What is an Internally Generated Intangible Asset?
Intangible asset developed within the company
## Footnote
Criteria for recognition and measurement
193
What are International Accounting Standards?
Predecessors to IFRS
## Footnote
Historical framework for financial reporting
194
What is the International Accounting Standards Board?
Body responsible for developing IFRS
## Footnote
Setting global accounting standards
195
What are International Financial Reporting Standards?
Set of accounting standards for financial reporting
## Footnote
Enhancing transparency and comparability
196
What is the International Sustainability Standards Board?
Board developing sustainability reporting standards
## Footnote
Promoting global sustainability disclosures
197
What are Interpretations?
Clarifications of IFRS standards
## Footnote
Ensuring consistent application
198
What are Intra-group Items?
Transactions between group entities
## Footnote
Eliminating in consolidated financial statements
199
What are Inventories?
Goods available for sale
## Footnote
Valuation methods (FIFO, LIFO)
200
What is the Inventory Holding Period?
Time inventory is held before sale
## Footnote
Efficiency in inventory management
201
What are Investing Activities?
Cash flows from acquisition and disposal of assets
## Footnote
Long-term investment decisions
202
What is Investment Property?
Property held for rental income or capital appreciation
## Footnote
Measurement at fair value or cost
203
What are Investment Ratios?
Ratios assessing investment performance
## Footnote
Return on investment (ROI) and others
204
What are Joint Arrangements?
Arrangements where two or more parties have joint control
## Footnote
Joint operations and joint ventures
205
What is Joint Control?
Contractual agreement to share control of an arrangement
## Footnote
Decision-making rights shared among parties
206
What are Joint Operations?
Joint arrangements where parties have rights to assets and obligations for liabilities
## Footnote
Recognizing assets, liabilities, and revenue
207
What are Joint Ventures?
Joint arrangements where parties have rights to the net assets
## Footnote
Equity method of accounting
208
What is Last-in, First-out (LIFO)?
Inventory valuation method
## Footnote
Most recently acquired items are sold first
209
What is Lease Liability?
Obligation to make lease payments
## Footnote
Present value of future lease payments
210
What are Leases?
Contracts allowing use of an asset for a specified period
## Footnote
Classification as operating or finance lease
211
What is a Liability?
Present obligations arising from past events
## Footnote
Settled through outflows of resources
212
What are Liquidity Ratios?
Measures of a company's ability to meet short-term obligations
## Footnote
Current ratio and quick ratio
213
What is Liquidity Risk?
Risk of being unable to meet short-term financial obligations
## Footnote
Managing cash flow and access to funding
214
What are Long-term Employee Benefits?
Employee benefits payable after more than 12 months
## Footnote
Accounting for post-employment benefits
215
What is a Low-value Asset?
Asset with a low cost that can be expensed immediately
## Footnote
Simplified accounting treatment
216
What is Management Commentary?
Narrative report accompanying financial statements
## Footnote
Providing context and insights into performance
217
What is Market Risk?
Risk of losses due to market fluctuations
## Footnote
Managing exposure to price changes
218
What is Materiality?
Importance of information in financial reporting
## Footnote
Influencing decisions of users
219
What is Measurement of an Element?
Process of determining the monetary amounts at which elements are recognized
## Footnote
Historical cost vs. fair value
220
What is a Monetary Asset?
Asset that represents a fixed amount of currency
## Footnote
Cash and receivables
221
What are Monetary Items?
Assets and liabilities that are fixed in terms of currency
## Footnote
Impact of inflation on monetary items
222
What is Multivariate Ratio Analysis?
Analysis using multiple financial ratios
## Footnote
Comprehensive assessment of financial health
223
What is Negative Goodwill?
Excess of fair value of net assets acquired over purchase price
## Footnote
Recognized as a gain in financial statements
224
What is Net Investment in Lease?
Lessee's investment in a lease
## Footnote
Present value of lease payments
225
What is Net Realisable Value?
Estimated selling price of an asset minus costs to sell
## Footnote
Valuation of inventories and receivables
226
What is Neutrality?
Financial reporting should be free from bias
## Footnote
Fair representation of financial position
227
What is a Non-adjusting Event?
Event occurring after the reporting period that does not affect financial statements
## Footnote
Disclosure requirements
228
What is a Non-controlling Interest?
Equity in a subsidiary not attributable to the parent
## Footnote
Reporting in consolidated financial statements
229
What are Non-current Assets?
Long-term assets not expected to be converted to cash within a year
## Footnote
Property, plant, and equipment
230
What are Non-current Assets Held for Sale?
Assets expected to be sold rather than used
## Footnote
Measurement at the lower of carrying amount or fair value
231
What are Non-current Liabilities?
Obligations not due within one year
## Footnote
Long-term debt and deferred tax liabilities
232
What is a Non-monetary Asset?
Asset that does not have a fixed monetary value
## Footnote
Includes intangible assets and property
233
What are Notes to the Financial Statements?
Additional information provided alongside financial statements
## Footnote
Enhancing understanding of financial data
234
What is the Objective of Financial Reporting?
To provide useful financial information to users
## Footnote
Supporting decision-making processes
235
What is the Objective of Financial Statements?
To present the financial position and performance of an entity
## Footnote
Transparency and accountability
236
What is an Obligating Event?
Event that creates a legal or constructive obligation
## Footnote
Recognition of liabilities
237
What is an Obligation?
A duty or commitment to settle a liability
## Footnote
Future outflows of resources
238
What is Offsetting?
Reducing the value of an asset or liability by the amount of another
## Footnote
Net presentation in financial statements
239
What is an Onerous Contract?
Contract where costs exceed benefits
## Footnote
Recognizing liabilities for expected losses
240
What are Operating Activities?
Cash flows from primary revenue-generating activities
## Footnote
Day-to-day business operations
241
What is an Operating Lease?
Lease not classified as a finance lease
## Footnote
Short-term rental agreements
242
What are Operating Segments?
Components of an entity engaged in business activities
## Footnote
Reporting performance of different segments
243
What is the Operating Profit Margin?
Ratio measuring operating profit as a percentage of revenue
## Footnote
Efficiency of core business operations
244
What is Operating Profit?
Profit from operations before interest and taxes
## Footnote
Indicator of operational efficiency
245
What are Options?
Financial derivatives giving the right to buy or sell an asset
## Footnote
Hedging and speculation strategies
246
What is Other Comprehensive Income?
Income not included in net profit
## Footnote
Items like foreign currency translation adjustments
247
What is a Parent?
Entity that controls one or more subsidiaries
## Footnote
Consolidation of financial statements
248
What is the Payables Payment Period?
Average time taken to pay suppliers
## Footnote
Managing cash flow and supplier relationships
249
What is a Performance Obligation?
A promise in a contract to transfer a good or service
## Footnote
Revenue recognition criteria
250
What is a Permanent Difference?
Differences between taxable income and accounting income that will not reverse
## Footnote
Impact on effective tax rate
251
What is Physical Capital Maintenance?
Maintaining the physical capacity of an entity
## Footnote
Ensuring sustainability of operations
252
What are Post-employment Benefits?
Benefits provided to employees after employment ends
## Footnote
Accounting for pensions and other retirement benefits
253
What are Preference Shares?
Shares with preferential rights over ordinary shares
## Footnote
Fixed dividends and priority in liquidation
254
What is a Present Obligation?
A duty or responsibility that an entity has to transfer economic benefits to another party.
255
What is Present Value?
The current worth of a future sum of money or stream of cash flows, discounted at a specific interest rate.
256
What is Presentation Currency?
The currency in which the financial statements are presented.
257
What is the Presentation of Financial Statements?
The structured format in which financial information is disclosed to users.
258
What is the Price Earnings Ratio?
A valuation ratio calculated by dividing the current share price by the earnings per share.
259
What are Prior Period Errors?
Mistakes in financial statements from previous periods that are corrected in the current period.
260
What are Profitability Ratios?
Metrics used to assess a company's ability to generate profit relative to its revenue, assets, or equity.
261
What is Profit from Operations?
The income generated from normal business operations, excluding any income derived from non-operational activities.
262
What is Profit Margin?
A financial metric that shows the percentage of revenue that exceeds the costs of goods sold.
263
What are Prompt Payment Discounts?
Discounts offered to customers for paying their invoices early.
264
What is Property, Plant and Equipment?
Tangible fixed assets used in the production of goods and services.
265
What are Provisions?
Liabilities of uncertain timing or amount, recognized when an entity has a present obligation.
266
What is Prudence in accounting?
The accounting principle that requires caution in financial reporting, ensuring that assets and income are not overstated.
267
What is Purchasing Power?
The value of money in terms of the quantity of goods or services it can buy.
268
What are Qualitative Characteristics?
Attributes that make financial information useful, including relevance and reliability.
269
What is the Quick Ratio?
A liquidity ratio that measures a company's ability to meet short-term obligations with its most liquid assets.
270
What is Ratio Analysis?
The use of financial ratios to evaluate a company's performance and financial health.
271
What is the Receivables Collection Period?
The average time taken to collect payments from customers.
272
What is Reclassification to Profit or Loss?
The process of moving amounts from other comprehensive income to profit or loss.
273
What is Recognition of an Element?
The process of formally recording an item in the financial statements.
274
What is Recoverable Amount?
The higher of an asset's fair value less costs to sell and its value in use.
275
What are Redeemable Preference Shares?
Shares that can be redeemed by the company at a future date.
276
What is the Reducing Balance Method?
An accelerated depreciation method that applies a constant rate to the declining book value of an asset.
277
What is a Regulatory Framework?
The set of rules and guidelines that govern financial reporting and accounting practices.
278
What are Related Parties?
Entities that have a relationship that could influence the financial and operating decisions of each other.
279
What is Relevance in financial information?
The quality of information that makes it useful for decision-making.
280
What is Reliability in financial reporting?
The assurance that financial information is accurate and can be depended upon.
281
What is a Reportable Segment?
A component of an entity that engages in business activities and is evaluated regularly by management.
282
What is a Repurchase Agreement?
A financial transaction in which one party sells an asset and agrees to repurchase it later at a specified price.
283
What is Research Expenditure?
Costs incurred in the investigation of new products or processes.
284
What is Residual Value?
The estimated value of an asset at the end of its useful life.
285
What are Restructuring Costs?
Expenses associated with reorganizing a company's operations.
286
What is Retrospective Application?
The application of a new accounting policy to prior periods as if it had always been in effect.
287
What is Retrospective Correction?
The correction of an error in prior financial statements.
288
What is Return on Capital Employed?
A financial ratio that measures a company's profitability and the efficiency with which its capital is employed.
289
What is Return on Equity?
A measure of financial performance calculated by dividing net income by shareholders' equity.
290
What is Return on Plan Assets?
The expected return on assets held in a pension plan.
291
What are Returns?
The income generated from investments or sales.
292
What are Revaluation Gains?
Increases in the value of an asset when it is revalued.
293
What are Revaluation Losses?
Decreases in the value of an asset when it is revalued.
294
What is the Revaluation Model?
An accounting method that allows assets to be carried at fair value.
295
What is Revenue?
The income generated from normal business operations.
296
What is a Right-of-Use Asset?
An asset that represents a lessee's right to use an underlying asset for the lease term.
297
What are Rights Issues?
Offers to existing shareholders to purchase additional shares at a specified price.
298
What is Sale and Leaseback?
A financial transaction where an asset is sold and then leased back from the buyer.
299
What is Segmental Analysis?
The breakdown of financial information by different segments of a business.
300
What is a Separable Asset?
An asset that can be sold or transferred independently from other assets.
301
What is a Separately Acquired Intangible Asset?
An intangible asset that is purchased separately from other assets.
302
What is Share-Based Payment?
Compensation given to employees in the form of shares or share options.
303
What are Short-Term Employee Benefits?
Benefits that are expected to be settled within 12 months.
304
What is a Short-Term Lease?
A lease with a term of 12 months or less.
305
What is Significant Influence?
The power to participate in financial and operating policy decisions of an entity.
306
What are Small and Medium-Sized Entities?
Businesses that meet specific criteria regarding size and revenue.
307
What is the Statement of Cash Flows?
A financial statement that shows the cash inflows and outflows over a period.
308
What is the Statement of Changes in Equity?
A financial statement that outlines changes in equity from transactions with owners.
309
What is the Statement of Comprehensive Income?
A financial statement that includes all income and expenses, including those not recognized in profit or loss.
310
What is the Statement of Financial Position?
A financial statement that provides a snapshot of an entity's assets, liabilities, and equity at a specific point in time.
311
What is the Statement of Income and Retained Earnings?
A financial statement that shows the income earned and the retained earnings over a period.
312
What is the Statement of Profit or Loss?
A financial statement that summarizes revenues and expenses to show net profit or loss.
313
What is the Statement of Profit or Loss and Other Comprehensive Income?
A combined statement that includes profit or loss and other comprehensive income.
314
What is Stewardship?
The responsibility of managing and safeguarding an entity's resources.
315
What is the Straight-Line Method?
A method of depreciation that allocates an equal amount of depreciation expense each year.
316
What is a Subsidiary?
A company controlled by another company, known as the parent company.
317
What is Substance Over Form?
An accounting principle that emphasizes the economic reality of transactions over their legal form.
318
What is Tax Base?
The amount attributed to an asset or liability for tax purposes.
319
What is Taxation?
The process of levying taxes on income, property, or goods.
320
What is a Temporary Difference?
A difference between the carrying amount of an asset or liability and its tax base.
321
What are Termination Benefits?
Compensation provided to employees upon termination of their employment.
322
What is Timeliness in financial information?
The quality of information being available to decision-makers in time to be useful.
323
What are Trade Payables?
Amounts owed to suppliers for goods and services received.
324
What are Trade Receivables?
Amounts owed by customers for goods and services sold.
325
What is Transaction Price?
The amount of consideration to which an entity expects to be entitled in exchange for transferring goods or services.
326
What is the UK Endorsement Board?
The body responsible for endorsing International Financial Reporting Standards in the UK.
327
What is an Underlying Asset?
The asset that is the subject of a financial instrument or transaction.
328
What is Understandability in financial information?
The quality of information that makes it comprehensible to users.
329
What is the Units of Production Method?
A method of depreciation based on the actual usage of an asset.
330
What are Unrealised Profits?
Profits that have not yet been realized through a sale or transaction.
331
What is the Unwinding of Discount?
The process of recognizing the passage of time on a discounted liability.
332
What is an Upstream Transaction?
A transaction where a subsidiary sells goods or services to its parent company.
333
What is Useful Life?
The period over which an asset is expected to be used.
334
Who are the Users of Financial Statements?
Individuals or entities that rely on financial statements for decision-making.
335
What is Value in Use?
The present value of the future cash flows expected to be derived from an asset.
336
What is a Venturer?
A party to a joint venture that shares control over the venture.
337
What is Verifiability in financial information?
The quality of information that enables users to confirm its accuracy.
338
What are Warranties?
Promises made by a seller regarding the condition of a product.
339
What is Weighted Average Cost (AVCO)?
An inventory valuation method that averages the cost of all similar items.
