In Class Test Flashcards
The conceptual framework for financial reporting is
normative theory
A conceptual framework for accounting is
a set of principles underpinning financial reporting
The primary objective of financial information is
decision usefulness
Benefits of having a conceptual framework
provides a basis for setting accounting standards/ standard setters are accountable for their decisions/ show that work is underpinned by theory
Fundemental characteristics of useful financial info are
relevance and faithful representation
Enhancing qualitative characteristics of financial info
comparability, understandability, timeliness and verifiability
Purpose of the conceptual framework for accounting is
assist IASB in setting IFRS
assist preparers of financial statements in applying IFRS
assist auditors in forming opinions on whether FS comply with IFRS
Primary users of financial statements
existing and potential investors, lenders and other creditors
An assosciate is an entity over which an investor has
significant influence
significant influence is
20% +
two categories of joint venture arrangements recognised by IFRS 11 are
joint operations and joint enterprises
Goodwill is
the difference between consideration paid and fair value of net assets acquired
control over an entity means
power to influence its financial and operating decisions
If a company is a subsidiary then these 3 must be true
own more than 50% voting rights/ right to variable return/ ability to affect returns through its power
NCI
the proportions of subsidiaries that aren’t owned by the group
