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Flashcards in Introduction & Ethics Deck (15):
1

Statement of financial position

A snapshot of the financial position of a company at a particular point in time.

2

Statement of profit or loss

A statement reflecting a businesses performance over a period of time. Includes income and expenses.

3

Fundamental qualitative characteristics

Relevance and faithful representation

4

Relevance

Financial information is relevant if it has:
- predictive value;
- confirmatory value.

5

Faithful representation

Complete, neutral, and free from error

6

Enhancing qualitative characteristics

Comparability, verifiability, timeliness, and understandability

7

Going concern

The entity is viewed as continuing in operation for the foreseeable future.

8

Materiality

Omissions or misstatements are material if they could influence the economic decisions of users taken on the basis of the financial statements.

9

Historical cost

Transactions are recorded at their cost when they were incurred. Historical cost understates asset values and overstates cost.

10

IESBA Code of Ethics

Professional competence and due care, Integrity, Confidentiality, Objectivity, Professional behaviour.

11

The accounting equation

Assets = Capital + Liabilities

12

Net assets

Assets less liabilities

13

Business Entity Concept

A business is a separate entity from its owner

14

Accruals/matching concept

Income earned is matched with the expenses incurred in earning it

15

Gross Profit Margin

GPM = (Gross Profit x 100)/Revenue