Term
| What is the conceptual framework? |
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Definition
| The Conceptual Framework is a set of core theories, principles, and definitions that dictate how financial statements are prepared and presented. |
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Term
| What are the elements that impact companies' accounting and financial reporting processes? |
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Definition
- National laws
- EU or other regulations
- Securities exchange rules
- Tax Regulations
- Accounting principles |
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Term
| 4 institutions involved in the IFRS Standard Setting process |
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Definition
1) The International Accounting Standards Board (IASB)
2) The International Financial Reporting Standards Foundation (IFRS Foundation)
3) The IFRS Interpretations Committee (IFRS IC)
4) The IFRS Advisory Council (IFRS AC)
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Term
| The objective of the IASB and the IFRS Foundation? |
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Definition
- Create a single, high-quality, and globally accepted set of accounting standards
- Promote the widespread application of the standards
- Work with national standard setters for convergence
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Term
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Definition
| Issue guidance on accounting topics where divergent interpretations of the standards exist or where new issues are not specifically dealt with in the standards. |
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Term
| Before any interpretation issued by IFRS IC becomes binding, who should approve them first? |
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Definition
| IASB (International Accounting Standards Board) |
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Term
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Definition
| Provide a forum for IASB to consult a spectrum of stakeholders who might be affected by the work of the board. |
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Term
| Typical procedure for developing a new standard |
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Definition
1) IASB identifies a topic and appoints a committee
2) A discussion paper issued by IASB to encourage comments from wider audience
3) IASB publishes exposure draft for public comment. This is the first draft version of the proposed standard.
4) Following receipt of comments, IASB publishes final text of new IFRS. |
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Term
| Primary users of the financial statements |
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Definition
Investors - buying, selling, holding equity
Lenders - provide loans and other forms of credit
Other creditors - to supply goods on credit and terms of credit
Government - calculate tax payable
Employees - assess job stability and opportunity
Customers - ensure stability of supply
Public - info about companies of interest |
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Term
| Fundamental characteristic |
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Definition
- Relevance - capable of influencing decision making
- Faithful representation - complete, neutral and free from error
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Term
| Enahancing qualitative characteristics |
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Definition
- Comparability - between entities and periods
- Verifiability - assurance that information is reliable
- Timeliness - available within appropriate time for decision making
- Understandability - understandable to those who use it
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Term
Underlying Assumption
(going concern basis) |
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Definition
Assumption that the entity will continue to operate for the foreseeable future (12 months).
If the business is no longer considered a going concern, the assets will be recognised at fair value, and the liabilities will be recognised at the amount likely paid to settle them. This is called the break up basis. |
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Term
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Definition
- Historical cost - original transaction price
- Current value - price needed to pay now
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Term
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Definition
- £50,000 capital minimum
- 2 shareholders minimum
- 2 directors minimum
- Accounts filed within 6 months
- Audited
- Raise capital by selling shares to public
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Term
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Definition
- 1 shareholders minimum
- 1 directors minimum
- Accounts filed within 9 months
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