FAC1601 - Financial Accounting & Reporting

1. IFRS International Financial Reporting Standards 2. International Financial Reporting Standards A set of rules developed to make sure that financial statements are prepared consistently for compa- nies so that users can compare the financial results and performance from the current year to prior years to the same company. Additionally, making it possible for users to compare the financial position and performance of one company with another. 3. Profit Company A company that is incorporated for the purpose of financial gain for its shareholders. Include: state-owned companies (SOC Ltd), private compa- nies [(Pty) Ltd], personal liability companies [Inc], and public companies [Ltd]. 4. Purpose of Conceptual Framework 5. Objective of General Purpose Financial Re- porting a) assist the IASB in developing IFRS that is con- sistent concepts b) aid the prepares of financial statements to devel- op consistent accounting policies in the absence of a standard. c) assist all parties to understand and interpret IFRS. To provide financial information about a reporting entity to its existing and potential investors , lenders and other creditors. 6. Financial Statements A specific form of financial reporting. They portray information about assets, liabilities, equity, income, and expenses. Based on Accrual Method of ac- counting. 7. Accrual Basis Account- ing 8. Qualitative Characteris- tics of Useful Financial Information reporting income when it is earned and expenses when they are incurred 9. Fundamental Qualita- tive Characteristics 10. Enhancing Qualitative Characteristics 11. The Statement of Finan- cial Position 12. The Statement of Profit or Loss and Other Com- prehensive Income 13. Statement of Changes in Equity 14. Statement of Cash Flows 15. Going Concern As- sumption a) Relevance : Materiality b) Faithful representation a) Comparability b) Verifiability c) Timeliness d) Understand-ability Contains information about the assets, liabilities and equity. Contains information about income and expenses A financial statement that summarises the changes in total shareholders' equity, as well as each com- ponent of shareholders' equity, for a specific period of time. Financial statement that reports cash receipts and disbursements related to a firm's three major activ- ities: operations, investments, and financing. The assumption that the company will continue in operation for the foreseeable future. 16. An Asset A present economic resource, controlled by a re- porting entity as a result of past events. 17. An Economic Resource A right that has the potential to produce economic benefits. 18. A Liability A present obligation of a reporting entity to transfer an economic resource as a result of past events. 19. Equity/Net wealth Includes issued share capital, reserves, members' contributions (Close Corporation "cc"), capital con- tributions ( partnerships), current accounts (part- nerships). 20. Unfavourable Equity Total Liabilities Total Assets 21. Favourable Equity Total Liabilities Total Assets 22. The Recognition Process 23. Statement of Financial Position Components 24. Statement of Profit or Loss and Other Comprehensive Income Components PPE, Investment Property, Intangible assets, Fi- nancial assets, Inventories, Trade and other receiv- ables (debtors) , Cash and cash equivalents (Bank or petty cash), Trade and other payables (Creditors) , Financial liabilities, Issued capital and reserves