Vol. 2 Financial Reporting Standards Flashcards
Financial reporting standards provide ….
(Financial Reporting Standards)
principles for preparing financial reports and determine the types and amounts of information that must be provided to users of financial statements
(Financial Reporting Standards)
An understanding of the underlying framework of financial reporting standards, will allow an analyst to ….
(Financial Reporting Standards)
assess the valuation implications of financial statement elements and transactions—including transactions, such as those that represent new developments, which are not specifically addressed by the standards.
(Financial Reporting Standards)
fill in the blank
The __________ sets financial reporting standard that have been adopted in many countries
IASB
International Accounting Standards Board
IASB is the international equivalent of what governing body in the US?
FASB
Financial Accounting Standards Board
fill in the blank
The ____ & _____ are standard-setting bodies, which are typically self-regulated organizations, vs. ____, which is a regulatory authority
(Accounting Standards Boards)
IASB & FASB ; SEC
(Accounting Standards Boards)
Financial reporting regulatory authority in the US
(Financial Reporting Standards)
SEC
(Financial Reporting Standards)
Financial reporting regulatory authority in the Singapore
(Financial Reporting Standards)
Accounting and Corporate Regulatory Authority
(Financial Reporting Standards)
Financial reporting regulatory authority in the Brazil
(Accounting Standards Boards)
Securities and Exchange Commission of Brazil
(Accounting Standards Boards)
fill in the blank
Generally, standard-setting bodies _(function)______ and regulatory authorities _(function)______.
(Accounting Standards Boards)
set the standards ; recognize those standards and enforce them
(Accounting Standards Boards)
fill in the blank
______, as established by the FASB, is officially recognized as authoritative by the SEC.
(Accounting Standards Board)
US GAAP
(Accounting Standards Board)
Fill in the blank
The IASB is the independent standard-setting body of the ___________, an independent, not-for-profit private sector organization.
(Accounting Standards Board)
IFRS Foundation
(Accounting Standards Board)
fill in the blank
Swiss-based companies have to prepare their financial statements in accordance with either _______ or _______ if they are multinational; if not, they may use ______.
(Accounting Standards Board)
IFRS or US GAAP ; Swiss GAAP
(Accounting Standards Board)
describe
Securities Act of 1933
compliance
This act specifies the financial and other significant information that investors must receive when securities are sold, prohibits misrepresentations, and requires initial registration of all public issuances of securities.
compliance
Sarbanes-Oxley Act of 2002
compliance
This act created the Public Company Accounting Oversight Board to oversee auditors. The SEC is responsible for carrying out the requirements of this act.
compliance
Purpose
Forms 10-K
compliance
Required to be filed annually. Form 10-K is for US registrants
Purpose
Forms 20-F
compliance
Required to be filed annually for non-US registrants except Canadian registrants
Purpose
Forms 40-F
compliance
Form 40-F is for certain Canadian registrants
compliance
Pu
Form 10-K financial disclosures include
compliance
- a historical summary of financial data (usually 10 years),
- management’s discussion and analysis (MD&A) of the company’s financial condition and results of operations, and
- audited financial statements.
compliance
The Conceptual Framework identifies two fundamental qualitative characteristics:
(International Reporting Standards Framework)
- relevance
- faithful representation
(International Reporting Standards)
In addition the Conceptual Framework identifies four enhancing qualitative characteristics:
comparability
verifiability
timeliness
understandability
(International Reporting Standards Framework)
Define
Assets
A present economic resource controlled by the entity as a result of past events.
Define
Liabilities
A present obligation of the entity to transfer an economic resource as a result of past events
The elements of financial statements directly related to the measurement of performance are
income and expenses
Define
Equity
(for public companies, also known as “shareholder stockholders’ equity)
Assets - liabilities
Define
Income
Define
Expenses
(Assumptions in Financial Statements)
A company reports revenues when ….
when they are earned (when the performance obligations have been satisfied), regardless of whether the company received cash before or after delivering the product
(Assumptions in Financial Statements)
The use of “accrual accounting” assumes that
financial statements should reflect transactions in the period when they actually occur, not necessarily when the cash movement occurs.
(Assumptions in Financial Statements)
The us of __________ assumes that financial statements should reflect transactions in the period when they actually occur, not necessarily when the cash movement occurs.
accrual accounting
(Assumptions in Financial Statements)
“Going concern” refers to
the assumption that the company will continue in business for the foreseeable future
(Assumptions in Financial Statements)
_________ refers to the assumption that the company will continue in business for the foreseeable future
“Going concern”
(Financial Statement Elements)
Historical cost
(financial Statement Elements)
Amortised cost
(financial Statement Elements)
Current cost
(financial Statement Elements)
Realizable (settlement) value
(financial Statement Elements)
Present value (PV)
(financial Statement Elements)
Fair value
(general requirements for financial statements)
The Conceptual Framework provides for _____, but does not address ______.
provides for a basis for establishing standards and the elements of financial statements, but does not address te general contents of the financial statements, which are addressed in International Accounting Standard (IAS) No. 1.
(general requirements for financial statements)
IAS No. 1 specifies …
the required financial statements, general features of inancial statements, and structure and content of financial statements.
(general requirements for financial statements)
structure and content
· classified balance sheet
· minimum specified information on face
· minimum specified note disclosures
· comparative information
IASB required financial statements
· statement of financial position (Balance seet)
· statement of comprehensive income (Single statement or Income statement + Statement of comprehensive income)
· statement of changes in equity
· statement of cash flows
· notes, summarizing accounting policies and disclosing other items
· in certain cases, statement of financial position from earliest comparative period
(general features of financial statements)
Fair Presentation
(general features of financial statements)
Going Concern
(general features of financial statements)
Accrual Basis
(general features of financial statements)
Materiality and Aggregation
(general features of financial statements)
No Offsetting
(general features of financial statements)
Comparative Information
(general features of financial statements)
structure and content requirements - classified statement of financial position (balance sheet)
(general features of financial statements)
structure and content requirements - minimum information on the face of the financial statements
(general features of financial statements)
structure and content requirements - minimum information in the notes
(general features of financial statements)
structure and content requirements - comparative information
