Read the summary and the most important questions on Intermediate Accounting IFRS summary

• 15 Equity

  This is a preview. There are 13 more flashcards available for chapter 15
  Show more cards here

• Accounting has three principles:

  Identification, measurement, and communication of financial information
  Economic entities
  Interested parties

• What means capital allocation?

  Process of determining how and at what cost money is allocated among competing interests. Its efficiency is crucial to the firm's health.

• What is necessary to ensure adequate comparability?

  A set of single accepted high-quality standards.

• To achieve adequate comparability, we need:

  Standards established by a single standard-setting body
  Consistency in application and interpretation
  Common disclosures
  Common high-quality auditing standards and practices
  Common approach to regulatory review and enforcement
  Education and training of markets participants
  Common delivery systems
  Common approach to company governance and legal framework around the world

• General-purpose financial statement provide?

  Financial reporting information to a wide variety of users. It mist provide most useful information possible at the least cost.

• What is the objective with financial reporting?

  The objective is to identify general-purpose financial statements users as credits and investors.

• There are three principles of general-purpose reporting:

  • Entity perspective;
    
  • Decision usefulness;
  • Accrual accounting.

• What means decision usefulness?

  The information provided should be useful to decision makers.

• What are the information that decision makers are interested in?

  • The company's ability the generate net cash inflow;
    
  • The management's ability to protect/enhance the capital providers' investment.

• What means accrual accounting?

  Company records events whenever they occurred as opposed to when they receive/pay the cash.