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Fin Reporting > Sách Chap 2 > Flashcards

Sách Chap 2 Flashcards

1
Q

Cash and profit rarely move in unison (cùng nhau). True or false?

A

True

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2
Q

Trường hợp nào thì total business profit tăng lên $9 mà cash balance lại giảm?

A

When the business hold more of its wealth in the form of inventories rather than cash

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3
Q

Sự khác biệt giữa 3 cái statements?

A
  • Income statement vs statement of CF lquan tới measuring flows (lần lượt của wealth and cash) during a particular period.
  • Balance sheet thì lquan tới financial position AT a particular moment in time
    => 3 cái ni đc coi là final accounts of the business.
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4
Q

Vì sao đối vs external users (mấy người ngoài managers) thì 3 cái statements ni are backward-looing?

A

b/c they are based on info concerning past events and transactions.

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5
Q

3 cái ni useful với external users ntn?

A
  • provide feedback on past performance và identify trends that provide clues to future performance.
  • mấy cái stm using projected data to help assess likely future profits, CFs,..
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6
Q

3 cái ni useful vs internal users ntn?

A
  • are prepared based on projected basis for internal decision-making only
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7
Q

4 conditions to be considered as an asset?

A
  1. A probable future benefit must exist
  2. The business must have the right to control the resource
  3. The benefit must arise from some past transaction or event
  4. The asset must be capable of measurement in monetary terms.
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8
Q

Bad depts là gì?

A

Depts that are not paid

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9
Q

A machine tiết kiệm cho cty 20000$ each year đã được DN mua và sử dụng nhưng is required on credit and is not paid for yet. Có được xem là TS ko? Why?

A

Đc. 1 khi DN agree to buy and accept the machine thì machine vẫn đc coi là asset mặc dù payment is still outstanding (chưa trả, còn tồn)

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10
Q

Vd cho intangible assets?

A

Patents

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11
Q

Tangible asset là gì?

A

Là assets that have a physical substance and can be touched

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12
Q

Intangible assets là gì?

A

Là assets have no physical substance but provide expected future benefits

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13
Q

Vì sao owner’s capital đc xem là 1 claim against the business??

A

Khái niệm business entity (business vs entity tách biệt nhau) => funds contributed by owners are seen as coming from outside the business

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14
Q

Kể tên các loại assets trong balance sheet?

A
  • Cash
  • Property
  • Plant and equipment
  • Fixtures and fittings
  • Patents and trademarks
  • Trade receivables (Debtors)
  • Investments outside the business
  • Inventories
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15
Q

Equity gồm gì?

A

Retained earnings (profit) vs owner’s capital

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16
Q

Cách gọi khác của trade receivables và trade payable?

A

Debtors vs trade creditor

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17
Q

For external reporting purposes, annual reporting period is the norm (tiêu chuẩn). Còn internal thì sao?

A

Monthly

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18
Q

1 dạng khác của acc equation

A

Assets (at the end of the period) =
Equity (amount at the start of the period)
+ Profit (hoặc - Loss) for the period
+ Liabilities (at the end of the period)

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19
Q

Current assets phải meet conditions nào?

A
  1. They are held for sale or consumption during the business’s normal operating cycle
  2. They are expected to be sold within the next year
  3. They are held primarily for trading
  4. They are cash, or near equivalents to cash (vd easily marketable, short-term investments)
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20
Q

The operating cycle of the business là gì?

A

The time giữa buying or creating a product or service and receiving the cash on its sale. In most business, hắn < 1 năm

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21
Q

Common current assets?

A

Cash, trade receivables, inventories, work in progress.

22
Q

Most sales made by most businesses are made on credit. Ngoại trừ?

A

Retail sales.

23
Q

The circulating nature of current assets?

A

Cash -> Inventories(stock) -> Trade receivables (trade debtors) -> Cash

24
Q

Chỉ trong service business, mọi thứ y chang, ngoại trừ?

A

Inventories is not involved

25
Q

Kể tai vài non-current assets?

A
  1. property
  2. furniture
  3. motor vehicles
  4. computers
  5. computer software
  6. reference books
  7. fixtures and fittings
26
Q

Purpose for which a particular type of asset is held may differ from business to business. Cho vd

A

A motor vehicle manufacturer tạo ra finished motor vehicles produced for resale (current asset).
A busniness uses motor vehicles for delivering its goods to customers (non-current asset)

27
Q

Current liabilities phải meet conditions nào?

A
  1. They are expected to be settled within the business’s normal operating cycle.
  2. They are held primarily for trading purposes
  3. They are due to be settled within a year after the date of the relevant statement of financial position.
  4. There is no right to defer settlement beyond a year aftẻ the date of the relevant statement of financial position.
28
Q

It is quite common for non-current liability to become current liability. Cho vd?

A

Borrowings to be repaid 18 months after the date of a particular balance sheet will appear as a non-current liability, but will be a current liability in balance sheet of next year

29
Q

Vd cho current liabilities?

A

Trade payables, bank overdraft ( a form of short-term bank borrowing that is repayable on demand)

30
Q

Vd cho non-current liabilities?

A

Long-term borrowings

31
Q

Kể tên các conventions?

A
  1. Going concern convention
  2. Historic cost convention
  3. Business entity convention
  4. Prudence convention
  5. Dual aspect convention
32
Q

Nội dung historic cost convention?

A
  • Value of assets trong balance sheet must be based on their acquisition cost (historic cost)
  • Not always rigidly adhered to – it can be acceptable to revalue non-current assets
33
Q

Current value của asset có thể được defined ntn?

A

Current replacement cost and current realisable value (selling cost)

  • 2 cái ni heavily dependent on the opinion of managers
  • đvs customer-built product thì khó identify 2 cái ni
34
Q

Lợi ích của report assets at their historic cost?

A
  • more reliable info is produced

- reduce the need for judgement

35
Q

Info based on based on past cost is always relevant to the needs of users. True or false?

A

False

36
Q

Application của prudence convention?

A
  • Record all losses at once and in full (actual losses+expected losses). Tập trung vào expected losses hơn expected profits.
  • Profit được ghi nhận when it actually arise
37
Q

Nội dung của prudence convention?

A
  • Accounts should present least favourable view
  • Yêu cầu expected loss from future sales be recognised immediately chớ ko phải lúc goods are eventually sold
  • Nhưng nếu inventories đc sold vs giá > original cost thì có thể ghi nhận profit at the time of sale.
  • counteract the excessive optimism of managers và prevent overstatement of financial position and performance
38
Q

Nội dung của going concern convention

A
  • Business will continue for the foreseeable future (usually 12 months)
  • If business is not considered a going-concern, accounting rules would have to be changed (writing down of assets, such as inventories)
39
Q

Nội dung của Materiality convention?

A

No need to make tiny adjustments which will have no effect on the overall picture

40
Q

Nội dung của Accruals convention?

A

Costs are accounted for as they are incurred, regardless of when money is paid

41
Q

Nội dung của Realisation convention?

A

Income is recognised as and when it is earned, not when payment is received

42
Q

Nội dung của Consistency convention?

A

Figures should be comparable from one year to the next

43
Q

Nội dung của Money measurement convention?

A

Accounts are restricted to matters which can be measured in money terms

44
Q

A company bought a building worth £2.5m. Now the market value is £3m. What is the value of the building ?
£2.5m (historic cost) OR
£3m (based on revaluation)

A

cả 2. vì cái ni là non-current assets, có thể revalue mà k nhất thiết p xài historic cost

45
Q

Nội dung của Prudence convention (2)?

A

Accounts should present least favourable view

  • Exercise caution when making accounting judgements
  • But being overly prudent could lead to poor decisions being made
  • Lower of cost and net realisable value
46
Q

A company buys & sells cameras, has 5 units @£300
Scenario A: Sell for $500
Value of inventory = £1,500 (5x£300) OR £2,500 (5x£500)

A

Dùng 1500 (historic cost)

47
Q

A company buys & sells cameras, has 5 units @£300
Cameras become obsolete, can only sell for @£250
Value of inventory = £1,500 (5x£300) OR £1,250 (5x£250)

A

Chọn 1250 (net realisable value)

48
Q

A company buys & sells cameras, has 5 units @£300
It cannot meet the debt payments and has to liquidate
Quick sale of cameras: £200
What is the value of the inventory?

A

But going concern problem, therefore
= £200 (net realisable value) x 5
= £1,000

49
Q

Vd cho consistency convention?

A

Accounting policies should not change from one year to the next, unless there is a good reason

50
Q

vd cho money measurement convention ?

A

Cannot place a money value on things such as ‘employee loyalty’ so cannot include in accounts

51
Q

vd cho Accruals convention?

A
  • electricity used this year should be included in the accounts for this year, even if the last bill will not be paid until next year
  • rent paid in advance should be removed from this year’s accounts, as it is an expense related to next year
52
Q

Vd cho realisation?

A

A sale is recorded when made, whether or not the customer pays cash or pays later

Fin Reporting (11 decks)

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