Summary
Summary FAC3764 - Assessment 5 /Exam - Learning Unit 1 - 11 - Notes
- Course
- Institution
- Book
Notes and summaries for Financial Accounting 3 - FAC3764 Learning Unit 1- 11
[Show more]
Connected book
Book Title:
Author(s):
- Edition:
- ISBN:
- Edition:
More summaries for
-
IAS 12 Taxation: Various types, current income tax and deferred tax
-
IAS 37 and IAS 10 Provisions, contingencies and events after the reporting date
-
IAS 8 Accounting policies, estimates and errors
Seller
Follow
johandrejvv
Content preview
Purpose of financial reporting: Provides financial information useful to:
o Investors
o Lenders
o Other creditors
What to Report:
o Economic resources and claims
o Changes in Economic resources and claim from financial performance and other
events
o Financial performance reflected by accrual (Overtime) accounting
o Financial performance reflected by past cash flows
Statement of Financial position:
Assets are the economic resources that meet the asset definition. (Goodwill, equipment,
trade receivables and cash)
Liabilities are the claims against an entity that meets the liability definition. (Borrowings,
trade payables and bank overdrafts).
Equity reflects the claims against an entity that meets the entity definition.
If an economic resource meets the definition of an asset and if a claim meets either the definition of a
liability or equity, and the recognition criteria are met, it will appear in the statement of financial
position. If it meets the definitions but does not meet the recognition criteria, but is considered to be
useful information, it will only be presented in the notes to the statement of financial position
Statement of financial performance:
Income reflects the changes in the resources and claims that meet the income definition.
(sales, rent and interest earned).
Expenses reflects the changes in the resources and claims that mee the expense definition.
(cost of sales, rent expense and interest incurred).
,Summary comparison: Financial statement versus financial
reports:
Financial Statements and reporting entity:
The reporting entity:
Definition: An entity that is required/chooses to prepare Financial Statements.
,If the reporting entity is a group of entities in which:
One of the entities has control over the others, statements are consolidated.
There is no control involved, the financial statements are called combined financial
statements.
Statement of financial position
Assets, liabilities, equity
Statement of financial performance
Income, expenses
Other Statements
Info about elements
Cash flows
Contributions / distributions
Assumptions, estimates
Reporting Period
assets, liabilities and equity will be presented and disclosed whether they existed at the
end of or during the reporting period
o existing at the end of the reporting period. Those are recognised have closing
balances.
o Existing during the reporting period: information about these will appear in the notes
within the reconciliations between the opening and closing balances.
Income and expenses are presented and disclosed if they arose during the entire reporting
period.
Going Concern
“Is a going concern that will continue in operations for the foreseeable future”
Qualitative Characteristics:
Fundamental:
Relevance (materiality)
Faithful Representation
Enhancing:
Comparability
Verifiability
Timeliness
Understandability
, Elements:
Asset
A present economic resource
Controlled by the entity
Resulting from past events
o Economic resource is defined as:
A right that has
The potential to produce economic benefits
Liability
A present obligation
To transfer an economic resource
Resulting from past events
o Obligation is:
A duty that entity has
No practical ability to avoid
Equity
The residual interest in the entity’s assets
After deducting all its liabilities
Expense
A decrease in assets or increase in liabilities
Resulting in decreases in equity
Other than distributions to holders of equity claims
Income
An increase in assets or decrease in liabilities
Resulting in increases in equity
Other than contributions from holders of equity claims
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller johandrejvv. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $14.81. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
73314 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now