IFRS 1 Flashcards
Public perception: of accounting
Our understanding:
International Financial Reporting: A Global Language
Use of International Financial Reporting Standards (IFRS) by jurisdiction
Chapter 1: Financial Reporting & Accounting Standards
- Explain the growing relevance of globalized financial markets and its relation to corporate financial reporting.
- Describe the objectives of financial reporting.
- Identify the major financial reporting institutions and their role
- Discuss the challenges related to financial reporting.
- Differentiate between single and consolidated financial statements
- Describe the key consequences of the EU’s IAS-Regulation adopted in 2002 and explain the endorsement process with regards to new IFRS
Accounting and Financial Reporting: Global Market
- Accounting is a system to process information and summarize business activities.
- Through financial reporting, we present it to enable better (economic) decision making!
Essential characteristics of accounting and financial reporting are:
– the identification, measurement, and communication of business transactions, i.e. financial information about
– economic entities to
– interested parties.
Information Environment and Financial Reporting
Accounting – Financial reporting – Capital allocation
Resources are limited: Efficient use of resources often determines whether a business thrives.
Demands of decision makers around the globe
Globalization demands a single set of high-quality, international accounting standards.
Summary: Need for international accounting standards
Objective of general purpose financial reporting
-Objective of Financial Reporting
Focus of general purpose financial reporting
Financial Reporting Institutions
Financial Reporting Institutions: EU environment
European IFRS Endorsement Process
„Endorsement“: Every -new or revised- standard (IAS/IFRS) or official interpretation (IFRIC) is subject to endorsement by the European Union, before it becomes effective in the European Union.
Financial Reporting Institutions: The ‘Standard-Setter’
Financial Reporting Institutions: The ‘Standard-Setter’ 2
Financial Reporting Institutions: The ‘Standard-Setter’ 3
IASB Pronouncements- Hierarchy of IFRS
IAS published
IAS/ IFRS published
Application of IFRS in the European Union
IAS Regulation includes member state options
Financial Reporting Challenges- IFRS in a Political Environment
Financial Reporting Challenges- Ethics in the Environment of Financial Accounting
Chapter 2: Conceptual Framework for Financial Reporting
- Explain the usefulness of a conceptual framework and the objective of financial reporting.
- Describe the qualitative characteristics of accounting information and the basic elements of financial statements.
- Know the basic assumptions of accounting.
- Illustrate the application of the basic principles of accounting.
Conceptual Framework for Financial Reporting
A Conceptual Framework establishes the concepts that underlie financial reporting.
Conceptual Framework
Structure and Contents of the Conceptual Framework
Hierarchy of Fundamental Financial Reporting Qualities
Fundamental Qualitative Characteristics
Fundamental Qualitative Characteristics- Faithful Representation
Qualitative Characteristics of Accounting Information
-Enhancing Qualitative Characteristics
Review Quiz 1
Review Quiz 2
Review Quiz 3
Review Quiz 4
2.2.2 Assumptions underlying Financial Accounting
2.2.3 Elements of Financial Statements
2.2.4 Recognition, Measurement, and Disclosure Concepts
Recognition Principles
Measurement Principles
Disclosure Concepts
Review of the contents in Chapter 2:
3.IAS 1 “Presentation of Financial Statements”
Chapter 3.1: Statement of Financial Position
Statement of Financial Position-elements
Balance Sheet: Minimum required information (see IAS 1.54)
Statement of Financial Position- Classification (current vs. non-current)
Statement of Financial Position- Classification (current vs. non-current)
Current assets
Non-current Assets
Statement of Financial Position-Equity
Statement of Financial Position- Current liabilities
Statement of Financial Position-Non-current liabilities
Review of the contents in Chapter 3.1:
Chapter 3.2: Statement of Comprehensive Income
Elements of the income statement
Elements of the income statement 2
Income Statement 3
Income Statement-Limitations
‘Earnings management and earnings quality’- Income statement
Income Statement (Format)–Nature of expense vs. function of expense method
Income Statement–Results of “operating” or “ordinary” activities
Statement of Comprehensive Income–Review of the contents in Chapter 3.2
Statement of Changes in Equity
Statement of Changes in Equity
Example (I/II):
Statement of Changes in Equity
Example (II/II):
Related Equity Statements–What are “Retained Earnings”?
Restrictions on Retained Earnings
Statement of Changes in Equity
Review of the contents in Chapter 3.3:
Statement of Cash Flows
Statement of cash flow—Purposes
Statement of Cash Flows—Definitions
Statement of Cash Flows—Content, Format & Classification
Statement of Cash Flows—-Methods to report Operating Cash Flows
Statement of Cash Flows–Example 1
Statement of Cash Flows–Exercise
Statement of Cash Flows—Cash flows from operations…
Statement of Cash Flows
Disclosure (I/II)
Statement of Cash Flows
Summary Quiz 1
Statement of Cash Flows
Summary Quiz 2
Statement of Cash Flows
Summary Quiz 3
Statement of Cash Flows
Review of the contents in Chapter 3.4:
Chapter 3.5: Notes to the Financial Statements
Notes to the Financial Statements
Notes to the Financial Statements—Other disclosures, including:
Notes to the Financial Statements—Additional Information
Guidelines for Financial Reporting
Notes to the Financial Statements—-Review of the contents in Chapter 3.5:
