1.Fin Report.

Question 1

What is Fin reporting ? Who are the users of reports ?

Answer 1

1. Recording,analysing & summarising
2. Stakeholders (each has different need) - employees,suppliers,investors,lenders,gov,mngmnt,public

Question 2

What are types of business entities ? What are adv and disadv ?

Answer 2

Sole trader
+flexible, autonomy
-full liability

Partnership
+more resources, lower expenses
-all partners must agree for others to join

Ltd
+ separation, property belongs to company,shares can be transferred, floating charge available
- legal fees/requirements, capital drawings limited, must produce/audit fin statements, some documents are public

Question 3

What’s does IFRS framework contain ?

Answer 3

Ideas and principles to help IASB develop reporting standards to assist in creating acc policies where guidance is needed

Question 4

Describe financial statements

Answer 4

S. Of fin position - summarise assets.liability and equity balances

S. Of cash flow - cash paid and received

P/L - revenue earned and cost incurred

S. Of changes in equity - movement in equity balance during period

Notes - required disclosures about business

Question 5

What is the aim of fin reporting?

Answer 5

To provide info on entity useful in making decisions

Question 6

What is prudence in fin reporting ?

Answer 6

Be cautious, not understate/overstate

Question 7

What’s qualitative characteristics of info ? What are 2 types ?

Answer 7

What makes it useful

Fundamental & enhancing

Question 8

What are fundamental characteristics?

Answer 8

Relevance ( can influence decision and is provided in time to make it) - it has predictive (asses past,present,future) or confirmatory (help confirm past valuation) value

Faithful representation (substance over form) ie: complete, neutral, free from error

Question 9

What are enhancing characteristics of info?

Answer 9

Comparability ( compare over time and compare different entities) consistency and disclosure is important

Verifiability (direct or indirect)

Timeliness ( available in time to make decisions)

Understandability (how is presented, users must perceive its significance- have knowledge)

Question 10

What are important principles when preparing fin reports ?

Answer 10

Materiality (vital for making proper decisions) eg. omission of important info leads to incorrect judgement

Accrual method

Going concern assumption

Substance over form

Prudence

Consistency