Chapter 18 - Financial Accounting and Reporting Every answer is on point, ensuring a flawless performance.
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Course
FAC1601 Financial Accounting & Reporting
Institution
FAC1601 Financial Accounting & Reporting
Financial Statements - Answer Summarize a company's operating results and financial position at a
point in time; records of historical performance that provide insight into how markets form performance
expectations and place a value on the company.
External - Answer These financial statements ar...
Financial Statements - Answer Summarize a company's operating results and financial position at a
point in time; records of historical performance that provide insight into how markets form performance
expectations and place a value on the company.
External - Answer These financial statements are the primary basis from which an org's external
constituencies form opinions about its financial condition and management effectiveness
Lenders - Answer Analyze financial statements to see if the company has been managed prudently
so that debts can be repaid.
Equity - Answer Examine financial statements for operating effectiveness and profit earned on
their investments.
Suppliers (Vendors) - Answer Examine financial statements to se if the company has adequate
liquidity and cash flow to pay for purchases; also: -to determine a potential customer's credit worthiness
-to assess competitor's operating and financing policies
-to identify and evaluate candidates for acquisition or merger
Internal - Answer These financial statements are used by owners and staff to manage the day to day
operation of an org. They are used for analyzing the org's performance and position in order to take
appropriate measures to improve overall results.
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, Global - Answer These accounting standards provide consistent in accounting for activities that are
common to all, or most, commercial enterprises. Being able to compare 'apples to apples' by using
commonly accepted accounting principles is the point of accounting, and of the __ and US accounting
standards boards. Most companies use IASB and IFRS; in the US we use GAAP.
International Accounting Standards Board (IASB) - Answer Determines general accounting
standards and is made up of board members from 9 countries. The mission is to develop a single set of
global accounting standards published as pronouncements called International Financial Reporting
Standards (IFRS).
International Financial Reporting Standards (IFRS) - Answer A single set of international global
accounting standards published as pronouncements from the IASB. Lays out a series of general principles
which all accounting statements must attempt to meet.
IFRS Basic Principles - Answer There are a number of qualitative characteristics that accountants
are expected to follow in selecting and applying appropriate accounting policies for their org under __ __
__:
1. Relevance
2. Materiality
3. Faithful Representation
4. Comparability
5. Verifiability
6. Timeliness
7. Understandability
8. Completeness (The Cost Constraint)
Relevance - Answer Information provided must be of value to decision makers and have predictive
value, confirmatory value, or both
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