The Regulatory Framework Flashcards

Question

What are the 5 elements of the financial statements?

Answer 1

``` Assets Liabilities Equity Income Expense ```

Answer 2

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

Answer 3

A present obligation of the entity to transfer an economic resource as a result of past events. An economic resource is a right that has the potential to produce economic benefits.

Answer 4

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

Answer 5

Share capital + reserves

Answer 6

Increase in assets, or decrease in liabilities, that result in increases in equity, other than those relating to contribution from holders of equity claims.

Answer 7

Decreases in assets, or increased in liabilities, that result in decreases in equity, other than those relating to distribution to holders of equity claims.

Answer 8

Including an element in the financial statements.

Answer 9

It meets the definition of an element Provides relevant information Can be faithfully represented Must do all three

Answer 10

When an element no longer meets the definition of an asset or liability.

Answer 11

Historical cost or current value

Answer 12

Typically original price paid or received. Once recorded this is not regularly updated each year except for impairments.

Answer 13

Values are updated to reflect conditions at the reporting dates.

Answer 14

Fair value - price that would be received to sell that asset or pay that liability in an ordinary arms length transaction. Eg independent price today Value in use - present value of all future cash flows Current cost - cost of an equivalent item if you had to replace it or settle the liability today

Answer 15

- focus on objectives rather than rules (qualitative characteristics) - grouping of similar items together - separation of dissimilar items - aggregation of similitudes (adding together) so no unnecessary details given - offsetting of assets and liabilities is generally not appropriate

Answer 16

Theoretical concept of which tries to ensure that excessive dividends are not paid.

Answer 17

Financial capital maintenance | Physical capital maintenance

Answer 18

Capital is maintained if the net assets at the end of the period are equal to or greater than the assets at the start of the year

Answer 19

Capital is maintained I’d the operating capacity of the entity is equal to or greater than at the start of the period

Answer 20

``` Integrity Confidentiality Competence and due care Professional behaviour Objectivity ```

Answer 21

Members should be straightforward and honest when doing work. This applies to financial reporting when preparing and presenting the information so accountants do not manipulate results.

Answer 22

Members should be fair in what they do. Members should not allow any prejudice or bias to influence the worn they are doing. Eg producing accurate financial statements not to try and reach a desirable outcome.

Answer 23

Memeber must refrain from undertaking or continuing any assignments which they are not competent to carry out. Members have a duty to maintain there professional knowledge.

Answer 24

Members should respect all information given to them by clients or employers as confidential and should not disclose any details of their work or findings without proper authorisation or legal obligation to do so.

Answer 25

Members should act in a manner which is consistent with a good reputation the profession has developed. Members should not discredit the profession and should try to enhance the reputation,

Answer 26

``` Self interest Self review Familiarity Intimidation Advocacy ```

Answer 27

Meets the definition of an element Provides relevant information Can be faithfully represented