role/purpose financial reporting

Question 1

role of financial reporting rat

Answer 1

•Track – from 1 period to the next
•Analyse – examine the figures and look for reasons why

•Report on financial activities – provide the figures to your shareholders

•Get a snapshot of metrics – a quick way to view performance

Question 2

importance of financial accuracy

Answer 2

give a clear understanding of how the business is really doing

clearly see discrepancies-theft/error

Question 3

financial statement

Answer 3

•end result of an accounting period
•provide relevant info for the accounting period

includes
•Balance sheet.
•Income statement.
•Cash flow statement.

Question 4

stakeholder information needs

Answer 4

Suppliers-Financial stability/ability to pay/potential for growth

Customers-Products and services/reputation/reliability/ ethics

Employees-Job security/pay levels/pay rise/growth or stagnation

Question 5

internal controls

Answer 5

checks implemented to ensure accuracy/reliability in financial statements in line w accounting standards

•prevent errors/misstatements in financial reporting through regular audits.
•minimise risks.
•prevent/recognise fraud.

Question 6

management accountability

Answer 6

establish/maintain internal control by ensuring someone takes responsibility in following required rules and policies.

•process actions.
•report results.
•maintain accurate records.

Question 7

financial regulations +values

Answer 7

•financial reporting council sets accounting standard

values
•fair
•effective
•Independent
•Influential

Question 8

accounting standards-definition-purpose

Answer 8

•types/amounts of information that must be provided for the users of financial reports.

•promote integrity/credibility and consistency .

••Ensures credibility in financial statements.

Question 9

financial report types

Answer 9

•Balance sheet.
•Profit and loss account.
•Cash flow statement.
•Management accounts.
•Year-end reporting.

Question 10

balance sheet

Answer 10

•balance sheet is a snapshot of all the assets, liabilities and capital of a business as at the end of a specific accounting period.

Question 11

profit/loss statement

Answer 11

•A profit/loss summarises the total income and expenses of the business for the same accounting period as the balance sheet.

Question 12

cash flow statement

Answer 12

•The cash flow statement is a record of the money transferred in and out of a business in an accounting period.

Question 13

management accounts-purpose-uses-what it includes

Answer 13

•report on the financial performance
•used by business owners/management to inform strategic decisions.
include:
•planning.
•budgeting.
•risk management.
•investments.
•key performance indicators.

Question 14

annual reports

Answer 14

•report details the business activities of the accounting period of a company.
include:
•financial information.
•company performance.
•key performance indicators.

Question 15

purpose of financial reporting

Answer 15

•Business income
•Examine resource usage
•Forecast and manage cashflow
•Monitor performance

Question 16

financial reporting accuracy

Answer 16

ensure you pay right amount of tax and don’t face reprocussions

Question 17

impact of bad financial reporting

Answer 17

non compliance
bad reputation
no understanding of financial heath of business

Question 18

generate financial reports

Answer 18

•Transactions are recorded.
•Post to ledger account.
•Prepare to trial balance.
•Journal and post adjustments.
•Prepare financial statements.

Question 19

benifits of using softwear to generate financial reports

Answer 19

•Automatically collects financial data.
•Accurately tracks trends and metrics.
•Forecasts impacts on business goals.
•increases efficiency and accuracy