Explain. Answer) In this course we have studied 6 IAS which are: IAS 1- tells us about the presentation of financial statements, the overall and minimum requirements and in which manner we should structure them, it also outlines all the principles and requires a set of financial statements to be prepared which are the balance sheet, income statement, statement of cash flows, statement of equity, notes to the accounts. IAS 7 – requires a company to prepare the statement of cash flows and it is one the main part of the financial statements. The cash inflow and out flows are classified in to operating activities, investing activities and financing activities. IAS 16 – tells us about the accounting treatment for property plant and equipment, i.e.
Standards issued by the IASC were referred to as International Accounting Standards (IAS), and consequently incorporated into IFRS, which in turn led to the international accounting standards currently being used. Although the practice of IFRS development occurred for a relatively long period, the adoption process by each country varied in time. In recent years, numerous countries have adopted the IFRS including Australia, Brazil, the European Union (EU), South Africa and more (PwC, 2013). The extensive adoption on a global scale gave rise to the increasing interest in IFRS among capital market participants, whom are concerned with the impact of the transition to the new standards on accounting quality
The company must identified the transactions that are related to the business are recorded in the accounting system. For example, a business transaction is occurred when the company purchased a motor vehicle. As a result, the event was identified and the new asset purchased should be added to the accounting
FINANCIAL ACCOUNTING Q1. Critically discuss the role, objectives and limitations of published annual financial statements for companies, and discuss the reasons for, and sources of regulation of the content and format of those financial statements Abstract This paper explains the financial accounting process in different business entities. The accounting process requires organizations to provide detailed and accountable statements regarding their firms’ activities. The statements range from income statements, balance sheets and the cash flows statements. The different statements have various roles, goals and limitations pertaining to each one of them.
It consists of all the income which causes changes in the stock holder’s equity e.g.-unrealized gains or losses, retirement investments or pension schemes, foreign currency adjustments etc. This statement helps in the future planning of the organization. Statement of Cash flows is a statement that provides information regarding the cash inflows and outflows of a business. Cash generated is categorized under three headings in the Statement of Cash flows namely Operating Cash Flows, Investing Cash Flows and Financing Cash Flows. It identifies the liquidity position of an entity and helps managers take relevant measures
Although this statement under accrual based accounting is related to revenue and expense, it does not contain information about cash flow form the three above activities. Furthermore, cash-based accounting can provide users the
When someone is looking at any income statement it’s essential to take a look to the footnotes because in there you can see how the accountants arrived to the totals. One big rule in the income statement is that many numbers reflect estimates and assumptions. Most of the time accountants have decided to include some transactions here and not there. They have to estimate most of the times. First of all, it’s essential to know how to manage the recognition of revenues.
Adequate disclosure in accounting practices mandates that all readers of a financial statement have access to relevant data that would be believed essential to understanding a company's financial position. Adequate disclosure requires that key facts are included within the financial statement to help investors and creditors adequately assess the financial situation of a particular company. Example Details of contingent liabilities, contingent assets, legal proceedings, etc. are relevant to the decision making of users and hence need to be disclosed. Details of property, plant and equipment cannot be presented on the face of the balance sheet, but a detailed schedule outlining movement in cost and accumulated depreciation should be presented in the
Though it is at times need for estimation the amount or timing of receivables, and unbelief is mostly many less than the provisions. Often it reported as part of the benefits of trade accounts and another payable, whilst provisions reported on separately. Scope IAS 37 eliminates requirements and possibilities rising of: [IAS 37.1-6] • 1) Fiscal implements that stand in the choice of IAS 39 fiscal tools: Confession and dimension (or IFRS 9 Financial Appliances). 2) Non-substantial executory agreements. 3) Insurance decades (see IFRS 4 Insurance decades), but IAS 37 does put on to other supplies, potential accountabilities and potential assets from an insurance company.
The Code of Ethics utters principles and potentials governing behavior of persons and businesses in the conduct of auditing. It illustrates the necessities for performance, and behavioral prospects rather than detailed actions. 1.6.1. The Code of Ethics for Professional Accountants by IESBA The International Ethics Standards Board for Accountants (IESBA) is an independent standard-setting body that serves the public interest by setting robust, internationally appropriate ethics standards, including auditor independence requirements, for professional accountants worldwide. These are assembled in the Code of Ethics for Professional