Samenvatting Intermediate Financial Accounting
HC 1 financial reporting
Annual report vs Financial statements
- Annual report -> unregulated
o Includes financial statements and many other things. Distributed through media,
firms, websites
- Financial statements -> regulated
o Accounting principles (GAAP), deposited in national registers
o Statement of fiancial positition (aka balance sheet), (Comprehensive) Income
Statement (aka P&L), Statement of cash flows, Statement of changes in
shareholders’ equity & accompanying notes
IFRS
- International set of rules
- (1)High quality, (2)Understandable (3)Enforceable, (4)Globally accepted, (5)Comparable
Conceptual framework
1. Objective of financial reporting: provide information & to make decisions
2. Qualitative characteristics of financial information: choose the alternative that provides
the most useful information for decision making
o Relevance: information is predictive of firm value and material (users would be
affected if omitted)
o Faithful representation: information is 1. Complete, 2. Neutral and 3. Free from
error
- When relevance and faithful representation are present, other information qualities
enhance the usefulness of accounting information
o Comparability, verifiability, timeliness, understandability
3. Financial statements and reporting entity: FS are presented under the going concern
consumption.
, o The reporting entity can be a single entity, a portion of an entity, or more than
one entity
4. The elements of FS: what is on the BS and P&L
5. Recognition and derecognition of elements FS
o Recognition: recognize elements in the FS they meet the conditions of relevance
& faithful representation
o Derecognition: removal of an element (or part) from the BS. Occurs in assets
(loose of control all or part of the asset) or liability (no longer a present
obligation)
6. Measurement: Historical / amortized costs or current value
7. Presentation and disclosure: can be presented in 2 statements 1. CI and OCI or 2. In one
statement differentiating each type of income
8. Concepts of capital and capital maintenance: financial capital (monetary capital) and
physical capital
HC 2 Financial statements
Income statement (Profit and Loss)
- Income: generated through the sale of a product or service. In general recognized when
ownership and control of the good is transferred to the customer.
- Double entry principle: each transaction is
recorded (at least) once on debit and on
credit)
o The accounting equation must remain in balance after each transaction
- Accrual accounting: assets, liabilities, revenues and expenses should be recognized
when the transaction occurs (not when cash is paid or received)
- Matching principle: product costs should be recognized whenever the product is sold
(i.e. match to their revenues)
HC 3 Fair value accounting IFRS 13
HC 1 financial reporting
Annual report vs Financial statements
- Annual report -> unregulated
o Includes financial statements and many other things. Distributed through media,
firms, websites
- Financial statements -> regulated
o Accounting principles (GAAP), deposited in national registers
o Statement of fiancial positition (aka balance sheet), (Comprehensive) Income
Statement (aka P&L), Statement of cash flows, Statement of changes in
shareholders’ equity & accompanying notes
IFRS
- International set of rules
- (1)High quality, (2)Understandable (3)Enforceable, (4)Globally accepted, (5)Comparable
Conceptual framework
1. Objective of financial reporting: provide information & to make decisions
2. Qualitative characteristics of financial information: choose the alternative that provides
the most useful information for decision making
o Relevance: information is predictive of firm value and material (users would be
affected if omitted)
o Faithful representation: information is 1. Complete, 2. Neutral and 3. Free from
error
- When relevance and faithful representation are present, other information qualities
enhance the usefulness of accounting information
o Comparability, verifiability, timeliness, understandability
3. Financial statements and reporting entity: FS are presented under the going concern
consumption.
, o The reporting entity can be a single entity, a portion of an entity, or more than
one entity
4. The elements of FS: what is on the BS and P&L
5. Recognition and derecognition of elements FS
o Recognition: recognize elements in the FS they meet the conditions of relevance
& faithful representation
o Derecognition: removal of an element (or part) from the BS. Occurs in assets
(loose of control all or part of the asset) or liability (no longer a present
obligation)
6. Measurement: Historical / amortized costs or current value
7. Presentation and disclosure: can be presented in 2 statements 1. CI and OCI or 2. In one
statement differentiating each type of income
8. Concepts of capital and capital maintenance: financial capital (monetary capital) and
physical capital
HC 2 Financial statements
Income statement (Profit and Loss)
- Income: generated through the sale of a product or service. In general recognized when
ownership and control of the good is transferred to the customer.
- Double entry principle: each transaction is
recorded (at least) once on debit and on
credit)
o The accounting equation must remain in balance after each transaction
- Accrual accounting: assets, liabilities, revenues and expenses should be recognized
when the transaction occurs (not when cash is paid or received)
- Matching principle: product costs should be recognized whenever the product is sold
(i.e. match to their revenues)
HC 3 Fair value accounting IFRS 13
