Financial statement overview Flashcards
(13 cards)
What is/has been the changing nature of asset values?
The % of total value made up of tangible and intangible assets
.1975- 83% tangible
.2015- 87% intangible
What is accounting? And simply what do they do?
Accounting is concerned with collecting, analysing and communicating financial information.
. Name things (categorise them)
. Count in said category
What is the purpose of accounting?
. Provide useful accounting information
. Assist users make informed decisions (decision usefulness)
What is the accounting process?
1) Identification (select economic event)
2) Recording( Record, classify and summarise)
3) Communication (prepare accounting reports)
4) Analyse and interpret for users
Who is interested in accounting information?
Internal and external users
Who are internal users? (Management accounting)
.Employees(Finance, Marketing, HR)
. Managers
. Directors
Who are external users? (Financial accounting)
. Shareholders . The Media . Prospective investors . Lenders . Suppliers (creditors) . Government . Customers
What is are the users, formats, level of detail, emphasis and regularity of financial accounting?
. Users- Wide group of stakeholders . Formats- dictated by accounting standers and law . Detail- summary . Emphasis-historic . Regularity-annual/biannual
When is a firms financial year? and give examples
. Whenever the firm wishes
. Many firms match with tax year
. Man utd- ends 30th June in line with season
What are the performance financial statements?
. Statement of Profit and Loss (SOPL)
. Statement of cash flows
What is the position financial statement?
Statement of financial position (SOFP) ‘Balance sheet’
What must accounting information be? Main qualities
. Relevant -should make a difference
. Faithful representation-should represent what it is supposed to represent (complete & accurate)
What is financial accounting?
Information that sets to meet the needs of external users
