Which accounting standard has replaced all previous standards?
The new UK GAAP
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Who's responsible for issuing financial standards
The Financial Reporting Council (FRC)
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Explain what is meant by accounting standard.
An accounting standard is a common set of principles, standards and procedures that define the basis of financial accounting policies and practices.
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What is the role of the Financial Reporting Council?
The role of the FRC is to be responsible for regulating auditors, accountants and actuaries and setting the UK's governance and stewardship codes.
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What is the objective of financial statements.
The objective of financial statements is to provide information about the financial position performance and cash flow of an entity that is helpful for economic decision making.
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According to the conceptual framework, what is the objective of financial statements?
The main objective of financial statements according to the conceptual factor is to provide information on the financial position, which will be useful to potential investors,lenders and creditors when making a decision.
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Name 8 characteristics of financial statements.
Understandability, Relevance, Materiality, Reliability, Substance over form, Prudence, Completeness, Comparability and Timeliness
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What does the term Faithful Representation mean?
The term Faithful Representation means that the financial statements produced should accurately represent the condition of the business.
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What does the term Materiality mean?
Materiality is the concept that the presence or absence of information and how it would effect the accuracy and validity of financial statements.
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What is the meaning of the term Prudence.
In accounting terms the word Prudence means a business must not underestimate or overestimate the information provided in the financial statements.
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Explain the meaning of limited liability.
Limited liability is where a persons financial liability is limited to a fixed sum, usually the amount they have invested into a business.
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What is the difference between a sole trader and a Limited Company.
The main difference between a sole trader and a Limited company is a sole trader is the sole owner where as a limited company has multiply owners called shareholders.
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Explain what corporate governace is.
Corporate Governance is the way in which companies in the UK are directed and controlled.
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Who regulates corporate governance?
The Financial Reporting Council (FRC)
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What type of companies are required to comply with the UK Corporate Governance Code.
Public Limited Companies (PLC)
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What is the name of the legal document that governs how a partnership is legally constituted and managed?
The Partnership Agreement
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Name two Issues which would be raised in a Partnership Agreement.
Parteners salaries and Partners drawing rights.
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How are sole traders, limited companies and partnerships taxed.
Sole traders and Partnerships are subject to income tax where as a limited company is subject to corporation tax.
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Other cards in this set
Card 2
Front
Who's responsible for issuing financial standards
Back
The Financial Reporting Council (FRC)
Card 3
Front
Explain what is meant by accounting standard.
Back
Card 4
Front
What is the role of the Financial Reporting Council?
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