Week 1 Acct Regulation and Conceptual Framework Flashcards Preview

ACCT3321 Financial Accounting > Week 1 Acct Regulation and Conceptual Framework > Flashcards

Flashcards in Week 1 Acct Regulation and Conceptual Framework Deck (26):
1

The Corporations Act requires which entities to prepare a Financial Report?

1. Disclosing Entities - listed on securities exchange

2. Proprietary Company

2

What are Proprietary companies?

-Ltd by shares/ un-ltd with share capital

-less than 50 non-employees (S/H)

-Does not require disclosure to investors (exc: ltd)

3

How to decide whether an entity is a reporting entity?

professional judgement

4

Define Reporting entity concept.

Used to determine whether entities are required to present GRFPs

5

What are the Tier 1 reporting requirements?

-For-profit private sector entities that have public accountability

-The Australian gov and state, territory and local govs.

6

What are the Tier 2 reporting requirements?

-For-profit private sector entities that do not have public accountability

-Not-for-profit private sector entities

-public sector entities (for-profit or not-for-profit)

-Territory and Local gov

7

What are the ASX requirements?

-Co's on stock exchange to comply with the ASX Listing Rules

-Continuous disclosure & periodic reporting

- Breach of law to disclose info

8

What are the functions of the AASB?

-Develop a CF
-Make acct standards

9

What is ASIC?

-markets and financial services regulator

- financial reporting surveillance

10

APRA aims to?

-promote financial stability by requiring institutions to manage risk prudently

-Minimise the likelihood of financial boss

-Identify key risks and ensure the risks are adequately measured, managed and monitored

11

What does ASX do?

1. oversees compliance with its operating rules

2. promote standards of corporate governance among Australia's listed co.'s

12

What does IASB do?

-develops/approves IFRS

-interpretations/guidance for acct standards

13

List the purpose of the Conceptual Framework.

-Assist board to develop acct standards

-Promote harmonisation of the diff acct standards

-Assist in preparing financial statements

-Assist auditors in preparing

-Assist users in interpreting info

14

What if the Australian Acct Std clashes with the Conceptual Framework?

Always follow the Australian Acct Standards.

15

Always assume that the entity is ?

a going concern; if not- financial statements need to be broken up

16

What are the elements of a Financial Statement?

-Asset
-Liability
-Equity
-Income
-Expenses

17

Define Asset.

1. Resource
2. Controlled by entity
3. Result of past events
4. From which future economic benefits are expected to flow from the entity

18

Define Liability.

1. Present obligation of entity
2. Arising from past events
3. Settlement of which is expected to result in an outflow of economic benefits

19

Define Equity.

A-L = E

20

Define Income.

1. Increases in economic benefits during acct period in the forms of inflows or enhancements of assets.

2. Decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants (capital)

21

Define Expenses.

1. Decrease in economic benefits during acct period in the forms of outflows or depletions of assets.

2. Incurrences of liabilities that result in decreases in equity, other than capital

22

Steps to recognising?

1. Do they meet the definition?

2. Do they meet the recognition criteria?
-> probable
-> measurable

23

List the measurement bases.

1. Historical cost
2. Current cost - cost of replacement
3. realisable (settlement value) - price is sold today
4. Present value - discounted cash flows

24

What are the concepts of capital?

1. Financial concept - equity of business

2. Physical concept of capital - productive capability of a business.

25

What are the Fundamental Qualitative characteristics of the Conceptual Framework?

1. Relevance
-> difference in user's DM?
-> materiality?

2. Faithful Representation
-> Complete
-> Neutral
-> Free from error (no omissions)

26

What are the enhancing qualitative characteristics of CF?

1. Comparability
2. Verifiability
3. Timeliness
4. Understandability