100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
Previously searched by you
College aantekeningen Finance 1 for Business (6012B0422Y) Financial Accounting with International Financial Reporting Standards, ISBN: $7.01
Add to cart
College aantekeningen Finance 1 for Business (6012B0422Y) Financial Accounting with International Financial Reporting Standards, ISBN:
17 views 0 purchase
Course
Finance 1 for Business (6012B0422Y)
Institution
Universiteit Van Amsterdam (UvA)
Book
Financial Accounting with International Financial Reporting Standards
College notes Finance 1 for Business (6012B0422Y) Financial Accounting with International Financial Reporting Standards, ISBN:
Notes of the first five lectures of the course. These lectures will be part of the mid-term.
1. Explain what accounting is
2. Explain how corporations use accounting
3. State the accounting equation and its components
4. Explain who uses accounting information
5. Describe the different financial statements
6. Analyse the effects of business transactions on the accounting equation
Accounting consists of three basic activities identifying, recording and communicating an
organisation’s economic events to interested users.
Organizations refer to companies, non-profit organizations and government organisations.
Let’s zoom in on companies. There are three types of companies
1. (sole) Proprietorships one owner who makes the decisions
2. Partnerships multiple owners who make the decisions
3. Corporations Management makes the decisions, and owners influence power through
shares.
Users refer to people and organisations who use the data to make economic decisions. There are two
types of users:
Financial accounting focuses on external users. Information is communicated through the financial
statement with the objective ‘’to provide financial information that is useful to users in making
decisions related to providing resources to the entity.’’
Information is useful when it is
1. Relevant: predictive value, confirmative value and material
2. Faithfully represented: complete, neutral and free from error
Under IFRS, the following principles and assumptions are used to ensure the achievement of the
objective.
1. Monetary unit assumption: all items should be expressed in monetary terms, such as euros
or dollars
2. Money entity assumption; the financial statement should be reported about the corporation
3. Measurement principles; regarding how the amount should be measured:
a. Historical costs principle: what you have paid to acquire the item
b. Fair value principle: what the item is currently worth
As mentioned before, financial information is communicated through financial statements. There are
five financial statements;
, 1. Statement of financial position (balance sheet)
2. Income statement
3. Statement of (other) comprehensive income
4. Statement of cash flows
5. Retained earnings statement.
These statements are all connected to each other, as shown below.
Balance sheet Income statement
Assets Liabilities
- Current assets - Current liabilities Revenues
- Non-current - Non-current liabilities - Expenses
assets Net Income or net loss
Equity:
- Share capital
- Retained earnings Statement of (other)
comprehensive income
Net income
+ other comprehensive income
Comprehensive income
Statement of Cash flows
Beginning cash
Statement of retained earnings
+ cash inflows
- cash outflows Beginning of retained earning
Ending cash + Net income
- Dividends
Ending retained earnings
The accounting equation: Assets – Liabilities = Equity
When Δ Assets = Δ Labilities, equity remains the same
When Δ Assets > Δ Labilities, equity increases
When Δ Assets < Δ Labilities, equity decrease
Changes in equity are caused by:
1. Revenue: increases equity
2. Expenses: decreases equity
3. Transactions with owners:
a. Issuing shares increases equity
b. Paying dividends decreases equity
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 lemdertien. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $7.01. You're not tied to anything after your purchase.
