100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
Previously searched by you
Previously searched by you
logo
Summary Financial Accounting and Reporting $5.94
Add to cart
Quickly navigate to
Preview
  2.  
  3. Tilburg University (UVT)
  4.  
  5. Financial Accounting And Reporting (324059M6)

Summary

Summary Financial Accounting and Reporting

2 reviews
 5 purchases
  • Course
  • Financial Accounting And Reporting (324059M6)
  • Institution
  • Tilburg University (UVT)
  • Book
  • Applying International Financial Reporting Standards

Summary of the selected chapters of the book “Applying IFRS standards” This summary is very comprehensive and makes the topics explained in the lectures even clearer!

Preview 4 out of 77  pages

Document information

  • No
  • Hoofstukken: 1, 3, 4, 5, 9, 11, 12, 13, 15
  • January 29, 2023
  • 77
  • 2021/2022
  • Summary

Subjects

  • financial accounting
  • reporting
  • ifrs
  • book
  • accountancy
  • uvt
  • international reporting standards

Connected book

book image

Book Title:

Author(s):

  • Edition:
  • ISBN:
  • Edition:

More summaries for

  • Applying IFRS Standards 4th Edition Ruth Picker - Test BankQUESTIONS & ANSWERS WITH RATIONALES COMPLETE AND WELL EXPLAINED BY EXPERTS ALREADY PASSED 100% CORRECT GRADED A+ LATEST UPDATE 2024 100% GUAR...
All for this textbook (1)

Written for

  • Tilburg University (UVT)
  • Accountancy
  • Financial Accounting And Reporting (324059M6)
All documents for this subject (5)

2  reviews

review-writer-avatar

By: wvanvlokhoven • 9 months ago

review-writer-avatar

By: inedelege • 1 year ago

Seller

avatar-seller
kirstennoteboom

Reviews received

Content preview

Chapter 1 – The IASB and CF
1.1. Formation of IASB
- In the 10th world congress of accountants, a proposal was put forward for
establishment of IASC (1972)
- The IASC was formed by 16 national professional accountancy bodies from 9
countries (1973)

Shortcomings:
- Weak relation with national standard setters
- Lack of convergence between IASDC standards and those adopted in major countries
(even after 25 years of trying)
- The board was only part time
- The board lacked resources and technical support.
1998: the committee responsible for overseeing the IASC began a reviews of IASC’s
operation à Recommendation: IASC replaced with a smaller, full-time International
Accounting Standards Board.
- IASB initially adopted the IAS Standards, with some clarifications. Standards where
revised or newly issued by IASB à IFRS standards. International Financial Reporting
Standards à both IFRS and IAS.

1.2. Purpose of a CF
The purpose of a conceptual framework is to provide a coherent set of principles:
 to assist standard setters to develop a consistent set of accounting standards for the
preparation of financial statements
 to assist preparers of financial statements in the application of accounting standards
and in dealing with topics that are not the subject of an existing applicable
accounting standard
 to assist auditors in forming an opinion about compliance with accounting standards
 to assist users in the interpretation of information in financial statements.

The role of the Conceptual Framework in providing guidance for dealing with accounting
issues that are not addressed by an IFRS is explicitly reinforced in IFRSs.

The CF has four chapters:
1. The objective of general purpose financial reporting
2. The reporting entity
3. The qualitative characteristics of useful financial reporting
4. The Framework (1989): the remaining text

The objective of general purpose financial reporting is to provide financial information about
the reporting entity that is useful to present and potential equity investors, lenders and
other creditors in making decisions about providing resources to the entity. Those decisions
involve buying, selling or holding equity and debt instruments, and providing or settling
loans and other forms of credit.

,1.3. Qualitative characteristics of useful financial information
Fundamental qualitative characteristics
Relevance:
- Capable of making a difference in the difference in the decisions made by capital
providers
- Predictive or confirmatory value or both.
o Predictive value: the information is useful as an input into the users’ decision
models and affects their expectations.
o Confirmatory value: information provides feedback that confirms, or changes
past/present expectations based on previous evaluations.
- It can make a difference whether the users use it or not. It is not necessary that the
information has made a difference in past/future.
Materiality: entity-specific aspect of the relevance of information. Information is material if
its omission or misstatement could influence the decisions that users make about specific
reporting entity.
Faithful representation:
- Complete: it includes all information necessary for faithful representation
- Neutral: absence of bias intended to attain a predetermined result.
- Free from error

The two fundamental characteristics may give rise to conflicting guidance. Example:
measurement base that provides the most relevant information about an asset will not
always provide the most faithful representation. Once the criteria relevance is applied to
information to determine which economic information should be contained in the financial
statements the criteria faithful representation is applied to determine how to depict those
phenomena in the statements. Either irrelevance (the economic phenomenon is not
connected to the decision to be made) or unfaithful representation (depiction is incomplete,
biased or contains error) results in information that is not decision useful.

Enhancing qualitative characteristics
- Comparability
- Verifiability
- Timeliness
- Understandability

1.4. Going concern
CF retains the going concern assumption. Financial statements are prepared under the
assumption that the entity will continue to be operate for the foreseeable future.

1.5. Definition of elements in the financial statements
Asset
A present economic resource controlled by the entity as a result of past events. (An economic
resource is a right that has the potential to produce economic benefits)

1. Must contain future economic benefits
2. Entity must have control over the future economic benefits

, 3. There must been a past event.

Liability
A present obligation of the entity to transfer an economic resource as a result of past events.
(An obligation is a duty or responsibility that the entity has no practical ability to avoid)

- Existence of a present obligation, being a duty or responsibility
- A liability must result in giving up of resources
o Paying cash
o Transferring assets
o Providing services
- Must have resulted from a past transaction/event.

Equity
The residual interest in the assets of the entity after deducting all the liabilities.
The characteristics of equity are
- Residual, something left over
- Equity increases as a result of profitable operations, that is, the excesses of income
over expenses, and contributions by owners. Similarly, equity is diminished by
unprofitable operations and by distributions to owners
- Equity is influenced by the measurement system adopted for assets and liabilities
and by the concepts of capital and capital maintenance adopted in the preparation of
general purpose financial statements.
- Equity may be subclassified in the statement of financial position.

Income
Increases in economic benefits during the accounting period in the form of inflows or
enhancement of assets or decreases in liabilities that result in increases in equity, other than
those relating to contributions form equity participants.

If income arises as a result in of an increase in economic benefits, it is necessary for the
entity to control that increase. If control doesn’t exist, then no asset exists. Income can also
exist through a reduction in liabilities that increases the equity.
Revenue: the gross inflow of economic benefits during the period arising in the course of the
ordinary activities of an entity when those inflows result in increases in equity other than increases
relating to contributions form equity participants. Revenue represents income which has arisen
from the ordinary activities of an entity.

Expense
Decreases in economic benefits during the accounting period in the form of outflows or
depletion of assets or incurrences in liabilities that result in decreases in equity, other than
those relating to distributions form equity participants.

To qualify as expense, a reduction in asset or increase in liability must have the effect of
decreasing equity. The purchase of an asset doesn’t decrease equity and therefore does not
create an expense. Expenses arise when the economic benefits in the asset are consumed,
expire or are lost. Losses are expenses that may not arise in the ordinary activities.

, 1.6. Recognition of elements of financial statements
Asset recognition
Asset should be recognized when it is probable that the future economic benefits will flow to
the entity and the assets has a cost or other value that can be measured reliably. An asset is
to be recognized only when both the probability and the reliable measurement criteria are
satisfied. Even if the probability is high, recognition of an asset cannot occur unless some
cost or other value is capable of reliable measurement.
Reliable measurement of internally generated goodwill has been difficult and therefore such
goodwill has not been recognized as asset.

Liability recognition
A liability is recognized in the statement of financial position when it is probable that an
outflow of resources embodying economic benefits will result from settling the present
obligation and the amount at which the settlement will take place can be measured reliably.
As with the recognition of assets, ‘probable’: chance of outflow of economic benefits being
required is likely.
Any liabilities that are not recognised in the accounting records because they do not satisfy
the recognition criteria may be disclosed in the notes to the financial statements, if relevant.

Income recognition
Income is recognized when an increase in future economic benefits relating to an increase in
an asset or decrease in a liability can be measured reliably. The majority of income in the
form of revenues results from the provision of goods/services. There is a little uncertainty
that the income has been earned since the entity has received cash or has an explicit claim
against an external party as a result of a past transaction. However, the absence of an
exchange transaction often raises doubts as to whether the income has achieved the
required degree of uncertainty. In this situation the CF requires the income to be recognized
as long as it is ‘probable’ that it has occurred, and the amount can be measured reliably.

Expense recognition
The expense recognition criteria have been developed to guide the timing of expense
recognition. The CF defines expenses in terms of decreases in future economic benefits in
the form of reductions in assets or increases in liabilities. In addition to the probability
criteria, the CF states that expenses are recognized when a decrease can be measured
reliably. An expense is recognized simultaneously with a decrease in an asset or increase in
liability. An expense is also recognized in the I/S when the entity incurs a liability without the
recognition of any asset (wages payable).

1.7. Measurement of the elements of financial statements
Measurement is the process of determining the monetary amounts at which the elements of
the financial statements are to be recognised and carried in the balance sheet [statement of
financial position] and income statement [statement of profit or loss and other
comprehensive income].

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

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

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

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 kirstennoteboom. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for $5.94. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

68175 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy study notes for 15 years now

Start selling
$5.94  5x  sold
  • (2)
Add to cart
Added