FAC1601 - Financial Accounting & Reporting test
IFRS - International Financial Reporting Standards
International Financial Reporting Standards - A set of rules developed to make sure that financial
statements are prepared consistently for companies so that users can compare the financial results
and performance from the current year to prior years to the same company. Additionally, making
possible for users to compare the financial position and performance of one company with another
Profit Company - A company that is incorporated for the purpose of financial gain for its
shareholders. Include: state-owned companies (SOC Ltd), private companies [(Pty) Ltd], personal
liability companies [Inc], and public companies [Ltd].
Purpose of Conceptual Framework - a) assist the IASB in developing IFRS that is consistent
concepts
b) aid the prepares of financial statements to develop consistent accounting policies in the absence
of a standard.
c) assist all parties to understand and interpret IFRS.
Objective of General Purpose Financial Reporting - To provide financial information about a
reporting entity to its existing and potential investors , lenders and other creditors.
Financial Statements - A specific form of financial reporting. They portray information about
assets, liabilities, equity, income, and expenses. Based on Accrual Method of accounting.
Accrual Basis Accounting - reporting income when it is earned and expenses when they are incurr
Qualitative Characteristics of Useful Financial Information -
Fundamental Qualitative Characteristics - a) Relevance : Materiality
b) Faithful representation
Enhancing Qualitative Characteristics - a) Comparability
b) Verifiability
c) Timeliness
d) Understand-ability
The Statement of Financial Position - Contains information about the assets, liabilities and equity.
The Statement of Profit or Loss and Other Comprehensive Income - Contains information about
IFRS - International Financial Reporting Standards
International Financial Reporting Standards - A set of rules developed to make sure that financial
statements are prepared consistently for companies so that users can compare the financial results
and performance from the current year to prior years to the same company. Additionally, making
possible for users to compare the financial position and performance of one company with another
Profit Company - A company that is incorporated for the purpose of financial gain for its
shareholders. Include: state-owned companies (SOC Ltd), private companies [(Pty) Ltd], personal
liability companies [Inc], and public companies [Ltd].
Purpose of Conceptual Framework - a) assist the IASB in developing IFRS that is consistent
concepts
b) aid the prepares of financial statements to develop consistent accounting policies in the absence
of a standard.
c) assist all parties to understand and interpret IFRS.
Objective of General Purpose Financial Reporting - To provide financial information about a
reporting entity to its existing and potential investors , lenders and other creditors.
Financial Statements - A specific form of financial reporting. They portray information about
assets, liabilities, equity, income, and expenses. Based on Accrual Method of accounting.
Accrual Basis Accounting - reporting income when it is earned and expenses when they are incurr
Qualitative Characteristics of Useful Financial Information -
Fundamental Qualitative Characteristics - a) Relevance : Materiality
b) Faithful representation
Enhancing Qualitative Characteristics - a) Comparability
b) Verifiability
c) Timeliness
d) Understand-ability
The Statement of Financial Position - Contains information about the assets, liabilities and equity.
The Statement of Profit or Loss and Other Comprehensive Income - Contains information about
