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14 Cards in this Set
- Front
- Back
- 3rd side (hint)
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What are the two fundamental qualitative characteristics of useful financial information |
Relevance Faithful Representation |
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What are the four enhancing characteristics of useful financial information |
Comparability Verifiability Timeliness Understandability |
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Name and define the two underlying assumptions governing the preparation of financial statements |
Going concern - the assumption that the business will continue trading in the near future Accrual - all relevant expenses have been accounted for in the year they relate to |
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Name the five elements of the financial framework |
Income Expenditure Assets Liabilities Equity |
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Define Income |
The increase in economic benefit during it's accounting period |
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Define Expenditure |
The decrease in economic benefit during it's accounting period |
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Define Asset |
A resource controlled or owned that creates future economic benefit. This is the result of a past event i.e purchase of asset |
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Define Liability |
A present obligation which produces an outflow from the entity of resources and is the result of a past event |
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Define Equity |
The residual interest in the assets of the entity after deducting all it's liabilities |
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An item should be recognised in the financial statements if... |
- There is a direct association between expenses being recognised in the p+l and the balance sheet. Also known as accrual or matching concept - Expenditure is not expected to result in the generation of future economic benefit - A liability is incurred without corresponding recognition of an asset |
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What are the four ways of measuring the elements |
Historic cost Current cost Realisable value Present value |
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What are the five fundamental principles of the AAT code of professional ethics |
Integrity - being honest and truthful Objectivity - not being biased Professional competence and due care - the commitment to your level of professional knowledge and skill Confidentiality - not disclosing personal information to others Professional behaviour - acting in such a way that doesn't bring the profession into disrepute |
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What are the threats to accountant objectivity |
Self-Interest Advocacy - occurs when you are asked to represent or promote the client in a certain way Familiarity Self-Review Intimidation |
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What do safeguards achieve |
They can eliminate ethical threats or reduce them to an acceptable level |
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