Term
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Definition
| Increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants. |
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Term
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Definition
| Gross inflow of economic benefits during the period arising in the course of ordinary activities of an entity when those inflows result in increases in equity. |
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Term
| When should revenue from the sale of goods be recognised? |
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Definition
When the significant risks and rewards of ownership of the goods are transferred to the buyer, and when it is probable that economic benefits associated with the transaction will flow to the group.
(Royalty and commission income is recognised based on the contract terms on an accrual basis) |
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Term
| What 2 conditions must be meet to ensure a liability is a liability and an asset is an asset? |
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Definition
| It must be probable that future benefits will arise, to or from the entity, and these benefits must be measurable. |
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Term
| According to IAS 18 Paras 9 and 10, how method should revenue be measure in |
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Definition
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Term
| When can revenue from the sale of goods be recognised? |
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Definition
| When the delivery of the goods to the customer takes place. |
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Term
| What information does a Journal Entry record? |
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Definition
| A Journal Entry records transactions. It records Injections and ejections of cash flow. All transactions are replicated on the balance sheet. Debits and Credits are recorded. The debits and credits must be equal for it to balance. |
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Term
| What Is a Balance Sheet (statement of financial position); And what information does it hold? |
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Definition
A balance sheet or Statement of financial position is a summary or a snapshot of an entities cash flows. Eg; purchases, expenses, loans, drawings from the owner, equity injected from the owner. Any transaction that occurs will be on here.
It is a snapshot of a firms resources and obligations at a point in time. |
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Term
| What should a complete set of financial statements for an entity comprise of? (Four Statements) |
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Definition
1. Balance sheet (statement of financial position)
2. Income Statement(statement of comprehensive income)
3. Equity statement (Statement of changes in Equity)
4. CashFlow Statement (statement of cash flows) |
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Term
| What is a cash flow statement? |
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Definition
The cash flow statement is concerned with the flow of cash, in and out of the business. The cash flow statement reflects a firms liquidity. It is concerned with three types of Financial activity:
1.Operating activities
2.Financial activities
3.Investing activities
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Term
| What is the Efficient market Hypothesis? (EMH) |
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Definition
| EMH asserts that financial markets are "efficient", that their traded prices reflect all known information and are therefore unbiased in the sense they reflect the collective belief of all investors about future prospects. |
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Term
| What are the three forms in which the efficient market hypothesis is commonly stated - |
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Definition
Weak form
Semi strong form
strong form |
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Term
When a construction contract covers a number of assets, it should be treated as separate construction contracts when :
(3 clauses) |
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Definition
-Seperate proposals have been submitted for each asset
-Each asset has been subject to separate negotiation and the contractor and customer have been able to accept or reject that part of the contract relating to each asset
-The costs and revenues of each asset can be identified |
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Term
| A group of contracts, whether with a single customer or with several customers should be treated as a single construction contract when |
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Definition
- The group of contracts is negotiated as a single package
-The contracts are so closely interrelated that they are, in effect, part of a single project with an overall profit margin;
-The contracts are performed concurrently or in a continuous sequence. |
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Term
| How can you recognise revenue for a transaction that is incomplete in a construction contract. |
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Definition
| Percentage of completion method |
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