Purpose Of Accounting Info Flashcards
Types of business entity
Sole traders
Partnership
Limited liability
The objectives of Financial statements
IRFS foundations conceptual framework states the objective it to provide info about the reporting entity that is useful to existing and potential investors etc in making decisions relating to providing resources to the entity
Who are the primary users of FS
Investors lenders and other creditors
What does the SOFP show
Lists all assets controlled and liabilities owed at a particular day
Equation for equity
Assets - liabilities = equities
Net assets = equity
What does a p+L show
Displays income and expense in a reporting period ( shows the performance of an entity)
What is GAAP
Generally accepted accounting practices
Uk gaap comes from
Companies act
Uk iafrs
Exchange listing requirements
What’s are FS required to give
True and fair view of the company
What are the IESBA code of ethics
Integrity
Objectivity
Pro competence
Confidentiality
Pro behaviour
What are the fundamental qualitative characteristics of financial info (per conceptual framework)
Relevance
Faithful rep
What is relevant info and what is it affected by
Relevant if it makes a diff to users decision
Eg has predictive or confirmatory value
Affected by nature and materiality
What is fathful rep
Faithful rep show complete unbiased and free from error information
What are enhancing qualitative characteristics
Comparability (from one period to next)
Verifiability
Timeliness
Understandability
What is going concern
Entity viewed as continuing in operation for the foreseeable future
