revision

Question 1

cash vs cash equivalents

Answer 1

Cash on hand is all the notes and coins held, and deposits at financial
institutions. Cash equivalents are highly liquid investments and borrowings that are part of cash
management and not subject to a term facility. Highly liquid investments are those that have
short terms to maturity, are readily converted to cash at the investors’ option and have a low
risk of changing in value

Question 2

management accounting

Answer 2

Details of all transaction and events, tailored reports generated from the accounting system (weekly sales reports, monthly profit or loss)

Question 3

financial accounting

Answer 3

General purpose Financial Reports
- Financial statements and notes in company reports
Sustainability reports

Question 4

Relevance (and materiality)

Answer 4

• Info is relevant if it is capable of making a difference to the decision made by users
  Info is capable of making a difference if has predicative value ( x necessarily a prediction), confirmatory value (feedback about previous evaluations of predictions) or both
• Info is material if omitting, misstating, or obscuring it could reasonably be expected to influence decisions that the primary users of GPFR make on the basis of those reports, which provide information about a specific reporting entity.

Question 5

faithful rep

Answer 5

Fin. Statements must faithfully represent the phenomena it purports to represent.
Must be complete, neutral and free from error

Question 6

Comparability

Answer 6

• Information should be comparable with other entities/other reporting periods
• Consistent application of accounting policies assists comparability

Question 7

Verifiability

Answer 7

• means different knowledgeable and independent observers could reach consensus (not necessarily complete agreement) that a particular depiction is a faith.rep

Question 8

Timeliness

Answer 8

• having info available in time to be capable of influencing decisions

Question 9

Understandability

Answer 9

• presenting clear and concise information
• assumes user have reasonable knowledge or access to someone else who does

Question 10

going concern

Answer 10

the FS are prepared on the assumption the entity will continue in operation for the foreseeable future, with neither the intention nor need to liquidate.

Question 11

Asset

Answer 11

a present economic resource controlled by the entity as a result of past events as an economic resource is a right that has the potential to produce economic benefits.

Question 12

Liability

Answer 12

to present obligation of the entity to transfer an economic resource as a result of past events.

Question 13

Equity

Answer 13

the residual interest in the assets of the entity after deducting all its liabilities.

Question 14

Income

Answer 14

increase in assets or decrease in liabilities, that results in increases in equity, other than those relating to contributions from holders of equity claims.

Question 15

expenses

Answer 15

dec. in assets or inc. in liabilities that result in a decrease in equity other than those relating to distributions to holders of equity claims.

Question 16

Historical Cost

Answer 16

-> the transaction price or value at time of recognition

Question 17

Value is use?

Answer 17

present value of future cash flows generated from use and ultimate disposal

Question 18

Fair Value

Answer 18

-> the market price (selling price)

Question 19

public companies

Answer 19

• A company that’s not a propriety company
• Minimum one shareholder, no maximum
• Mostly limited companies (Ltd or PLC)… liability is limited to unpaid amounts on issued shares
• No restrictions on raising capital from public… must be accompanied by a disclosure document / may be listed on a local securities exchange (e.g ASX)
• No restriction on transfer of ownership… if listed, then shares are traded via the ASX