ACFI201

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What is financial reporting?
Published set of financial statements containing: Statement of Financial Position, Statement of Profit or Loss and other comprehensive income, Statement of changes in Equity , Statement of Cash Flows and notes.
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What are financial reporting standards?
Rules which can be set nationally (e.g. UK) or internationally (e.g. IFRS - EU listed companies must comply with these!)
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What is the conceptual framework?
A set of principles which determine how financial statements are prepared and what they contain.
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Fundamental Characteristic - Relevance
This means to make a difference to decisions, so financial information must have a predictive value, confirmative value and be material (i.e. makes a difference to a decision)
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Fundamental Characteristic - Faithful Representation
Financial information that is complete, neutral and free from error. Financial statements should 'present fairly' the financial performance and position of a business.
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Enhancing Characteristic - Comparable
Should be able to compare in time (e.g. compare 2017 and 2016) and to competitors.
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Enhancing Characteristic - Verifiable
Independent observers reach the same conclusion when they check it.
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Enhancing Characteristic - Timely
Financial information needs to be produced in the to allow decisions to be made.
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Enhancing Characteristic - Understandable
Financial information should be clear and concise, and understandable to someone with reasonable business knowledge.
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ASSETS
A resource controlled by the entity as a result of past events, and from which future economic benefits are expected to flow to the entity.
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LIABILITY
A present obligation of the entity arising from past events, the settlement of which is expected to lead to the outflow from the entity of resources.
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EQUITY
Assets less liabilities.
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INCOME
Increase in assets or Decrease in liabilities.
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EXPENSE
Decrease in assets or Increase in liabilities
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HISTORIC COST
Original price paid
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CURRENT COST
How much you would pay in todays prices to buy an equivalent.
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NET REALISABLE VALUE
Selling price less cost to sell
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PRESENT VALUE
Discounted future cash flows.
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Other cards in this set

Card 2

Front

Rules which can be set nationally (e.g. UK) or internationally (e.g. IFRS - EU listed companies must comply with these!)

Back

What are financial reporting standards?

Card 3

Front

A set of principles which determine how financial statements are prepared and what they contain.

Back

Preview of the back of card 3

Card 4

Front

This means to make a difference to decisions, so financial information must have a predictive value, confirmative value and be material (i.e. makes a difference to a decision)

Back

Preview of the back of card 4

Card 5

Front

Financial information that is complete, neutral and free from error. Financial statements should 'present fairly' the financial performance and position of a business.

Back

Preview of the back of card 5
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