Introduction to Financial Accounting (Week 1)

Question 1

What is Financial reporting and its purpose?

Answer 1

To record, analyse and summarise financial data

Question 2

Types of Businesses:

Answer 2

–> Sole Traders (unlimited liability)

–> Partnerships (unlimited liability)

–> Public Limited Company (limited liability)

–> Private Limited Company (limited liability)

Question 3

The need for financial statements:

Answer 3

–> Decision-making
–> Accountability and Transparency
–> Performance Measurement
–> Compliance

Question 4

Users of Financial Statements:

Answer 4

–> Shareholders
–> Investors
–> Employees
–> Government
–> Tax company
–> Managers
–> Banks/ Loaners

Question 5

Corporate Governance

Answer 5

The system by which companies are directed and controlled

Question 6

What is an Audit?

Answer 6

A report from an external party to check whether the company’s financial statements are true

Question 7

Threats to Independence

Answer 7

–> Business Relationships
–> Financial Interests
–> Employment Relationships
–> Family and Personal Relationships
–> Length of Service
–> Fees, Remuneration, Bribery