Accounting Framework (wk 1 lesson 1 DONE

Question 1

Accounting manages economic events
in what three basic activities?

Answer 1

1) identifies,
2) records
3) communicates

Question 2

what is Financial Accounting?

Answer 2

Financial Accounting is publicly Publishing financial statements and other financial reports

Question 3

What is managerial Accounting?

Answer 3

Information for decision making, and control of an organisation’s operations

Question 4

Is Financial accounting external or internal?

Answer 4

Financial accounting is mainly external

Question 5

what is the nature of reports for financial accounting?

Answer 5

The nature of reports for financial accounting are general purpose

Question 6

What is the level of detail in financial accounting?

Answer 6

Financial accounting is a broad overview

Question 7

What are the restrictions of financial accounting?

Answer 7

Financial accounting must follow accounting standards and other regulations

Question 8

What is the reporting interval for financial accounting?

Answer 8

With financial accounting the reporting interval is mainly semi annual or annual

Question 9

What is the time horizon for financial accounting?

Answer 9

Financial accounting is mainly historical

Question 10

What is the range of information in financial accounting?

Answer 10

The range of information is quantifiable in money terms and focuses on objective and verifiable data

Question 11

what is the focus of management accounting?

Answer 11

Management accounting is internal only

Question 12

what is the nature of reports in management accounting?

Answer 12

the nature of reports in management accounting are specific

Question 13

What is the level of detail in management accounting?

Answer 13

in management accounting the reports are quite detailed

Question 14

What are the restrictions in management accounting?

Answer 14

in management accounting there are no restrictions

Question 15

What is the reporting interval for management accounting?

Answer 15

in management accounting reports are made whenever required not annually or semi annually.

Question 16

What is the time horizon for management accounting?

Answer 16

Management accounting focuses on both past and future in its reports

Question 17

What is the range of information in management accounting?

Answer 17

It can contain non-financial information with less of a focus on objectivity and verifiability

Question 18

Who are the internal users of accounting data?

Answer 18

The internal users of accounting data are:
1) marketing
2) management
3) Finance
4) Human Resources

Question 19

Who are the external users of accounting data?

Answer 19

The external users of accounting data are:

1) Investors
2) creditors
3) government and other stakeholders

Question 20

who are the two boards upholding conceptual frameworks bringing consistency to accounting concepts and practices?

Answer 20

1) International Accounting Standards Board (IASB) - International Financial Reporting Standards (IFRS) Europe
2) Financial Accounting Standards Board (FASB) - Generally Accepted Accounting Principles (GAAP) American

Question 21

What is the definition of Assets?

Answer 21

Assets are a resource controlled by the entity from which future economic benefits are expected to flow to the entity.

Question 22

What is the definition of a Liability?

Answer 22

A liability is an entity’s obligation to transfer economic benefits as a result of past events.

Question 23

What is the definition of Equity?

Answer 23

Equity is the residual interest in the assets of an entity after deducting all its liabilities.

Question 24

What is the definition of Income?

Answer 24

The definition of income is the Increase in equity (other than those relating to contributions from owners).

Question 25

What is the definition of expenses?

Answer 25

The definition of expenses is the decrease in equity (other than those relating to contributions from owners).

Question 26

What is the definition of a business entity?

Answer 26

The definition of a business entity is that a business is separate from it's owner(s)

Question 27

What is the definition of historical cost?

Answer 27

The definition of historical cost is that transactions are recorded at the cost when they occurred.

Question 28

What is the definition of going concern?

Answer 28

The definition of going concern is that entity will continue in operation for the foreseeable future.

Question 29

What is the definition of accruals?

Answer 29

The definition of accruals is that Revenue and costs must be recognised as they are earned or incurred, not as money is received or paid.

Question 30

What is the definition of consistency?

Answer 30

The definition of consistency is that the presentation and classification of items should stay the same from one period to the next.

Question 31

What is the definition of Materiality?

Answer 31

The definition of materiality is that Information is material if its omission or misstatement could influence the economic decision of users.

Question 32

What are the 5 financial statements?

Answer 32

the 5 financial statements are: 1) Statement of financial position (Balance sheet) 2) Statement of profit and loss & other comprehensive income 3) Statement of changes in equity 4) Statement of cash flows 5) Accounting policies and explanatory notes

Question 33

What is the objective of a financial statement?

Answer 33

According to IASB, financial statements is "to provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions".

Question 34

What are the Fundamental Qualitative Characteristics of financial information?

Answer 34

Fundamental Qualitative Characteristics -Required for information to be useful -Include Relevance and Faithful Representation

Question 35

What are the enhancing Qualitative Characteristics of financial information?

Answer 35

Enhancing Qualitative Characteristics -Enhance usefulness of accounting information -Include Comparability, Verifiability, Understandability & Timeliness

Question 36

what is the definition of relevance?

Answer 36

Information is relevant if it influences stakeholder decisions

Question 37

what is the definition of Faithful Representation?

Answer 37

Faithful Representation is when Financial statements capture the economic activity of an entity. The information must be: Complete Neutral – freedom from bias no significant errors no omissions

Question 38

what is the definition of comparability?

Answer 38

comparability Provides users with information that is readily comparable

Question 39

what is the definition of verifiability?

Answer 39

verifiability is when Independent and knowledgeable observers should find similar results when measuring an item

Question 40

what is the definition of Understandability?

Answer 40

Understandability is when accounting information is prepared for stakeholders with ‘reasonable understanding of business’

Question 41

what is the definition of Timeliness?

Answer 41

Timeliness helps users make informed decisions i.e. shouldn’t be out of date

Question 42

what are the three main types of profit making entity's?

Answer 42

1) Proprietorship/ Sole trader 2) Partnership 3) Corporation/ Limited company

Question 43

what is a Corporation/ Limited company?

Answer 43

A Corporation/ Limited company is: 1) Ownership divided into shares. 2) Separate legal entity organized under state corporation law 3) Limited liability

Question 44

what is a Partnership?

Answer 44

A partnership is: 1) Owned by two or more persons 2) Often retail and service-type businesses 3) Generally unlimited personal liability Partnership agreement

Question 45

what is a Proprietorship/ Sole trader?

Answer 45

A Proprietorship/ Sole trader is: 1) Generally owned by one person 2) Often small service-type businesses 3) Owner receives any profits, suffers any losses, and is personally liable for all debts

Question 46

What is a private Limited Company?

Answer 46

A private limited company is ‘Limited’ (‘Ltd’ ) A private limited company is prohibited by law from offering its shares to the public (appropriate to a family-controlled business)

Question 47

What is a public Limited Company?

Answer 47

A public limited company has the abbreviation ‘plc’ in its title The public limited company is permitted to offer its shares to the public. In return, it has to satisfy more onerous regulations