Tutorial 1 Flashcards
What does the Financial Position compose of?
Economic Resources and Claims
What is an Asset?
A resource controlled by the entity that has the potential to produce economic benefits
What is a Liability?
An obligation to transfer an economic resource (monetary or non-monetary)
What is Equity?
The residual claim in the asset after deducting all the liabilities
What does the Financial Performance compose of?
Income and Expenses
What is income?
An increase in assets or decreases in liabilities
What is an Expense?
A decrease in assets or increase in liabilities
What does “Substance over form” mean?
It means that you have to look at transactions economic substance rather than their legal form
A Parent is an entity that controls one or more entities, what does control mean?
It means that an investee is exposed or has rights to variable returns and that the investee has the ability to affect the returns through its power
Give a few examples of control
Majority of voting rights
Contractual agreement
Majority of board members
What is Consolidated Financial Statements?
A combinations of financial statements in a group combined to look as an financial statement for the whole company
What is Intercompany Elimination?
You remove internal transactions from within the group
When do you use profit from discontinued operations?
If the sale of a major line of business is highly probable or executed. The income and expenses of the disco are presented as a single amount
What does the statement of cash flows compose of?
Cash and Cash Equivalents at the beginning of the period
+/- Cash flow from Operating Activities
+/- Cash flow from Investing Activities
+/- Cash flow from Financing Activities
= Cash and Cash Equivalents at the end of the period
What is Operating Activities?
Everything that is not investing or financing
