ACCAF3(1-3)

Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,*,Click to edit Master title style,Financial Accounting,Study text,200,9,-2010,Aim of F3,Develop knowledge and understanding of the basic principles and concepts relating to financial accounting,Develop technical proficiency in the use of double-entry accounting techniques including the preparation of basic financial statements,Syllabus,（, context and purpose of financial reporting (A),The qualitative characteristics of financial information and the fundamental bases of accounting (B),The use of double entry and accounting systems (C),Recording transactions and events (D),Preparing a trail balance (E),Preparing basic financial statements (F),Types of business entity,The users of financial reporting,Financial accounting and management accounting,2,3,4,What is financial reporting,1,Chapter 1 Introduction to accounting,5,The main elements,of financial reporting,1.1 What is financial reporting,Financial reporting is a way of rec,ording , analyzing,and,summarizing,financial data .,Business entity,Transactions,Books of prime entry,Ledgers,Financial statements,users,Record,Analyze,Summarize,Sole trader,-,- a biz is owned and operated by one person with or without employees. The contributor is himself.,Partnership,-,- several people jointly operate the biz. The contributors are partners.,Company,- usually are limited companies. The contributors are called shareholders or members of the company. shareholderss liabilities are limited to the money they have put into the company.,1.2 Types of business entity,1.2 Types of business entity,Owner (s),Personal liability,Sole traders,One,Personally liable,partnerships,More than one,Personally liable,Limited liability companies,Shareholders or members,Are responsible for their shares,Businesses of whatever size or nature exist to make a profit .,1.2 Types of business entity,Companies,As a group they elect the directors who run the business.,shareholders directors companies,Advantage and Disadvantage (P6),elect,run,run,W,hich of the following are differencies between sole traders and liability companies?,1 a sole traders finacial statements are private,a companies financial statenments are sent to shareholders.,2 only companies have capital invested into the business.,3 sole trader has fully and personally liably for any losses that the business might make ;a companys shareholder are not personally liable for any losses that the company might make .,External,：,shareholders,Providers of finance to the company,Government,Taxation authorities,The public,.,Users of information,Internal :,Managers of the company,Employee,1.3 Users of accounting information,Managers,need financial information for planning and decision-making,Employees,need financial information to safeguard their jobs and income,Shareholders and potential shareholders,need financial information for investment decision,Providers of finance,need financial information to safeguard loans that they have made or intend to make,Government and their agencies,need financial information to monitor the economy and to collect tax,1.3 Users of accounting information,1.4 The category of accounting,Financial accounting,Management accounting,Accounting,项目,管理会计,财务会计,必要性可选择要求,目的协助管理为外部使用者,使用者小群体，了解大群体，不了解,基本结构依信息的使用会计恒等式,遵循的原则对管理层有用会计准则,时间范围历史、,未来,历史,信息内容货币及非货币的货币的,Financial accounting and management accounting,Continue .,项目,管理会计,财务会计,报告频率 按月或按周 按季或按年,报告时限 报告期结束后 延迟数周或数月,报告主体 责任中心 组织整体,潜在责任 无诉讼危险 存在诉讼危险,1.5 the main elements of financial,reports,Key term:,The,balance sheet (the statement of financial position )is simply a list of all assets and liabilities,at a particular data,it is a snapshot of the financial position of the business at a particular moment.monetary amounts are attributed to each of the assets and liabilities,.,Key term:,The income statement (the statement of comprehensive income) is a record of revenue and expenditure incurred,over a given period.,The statement shows whether the business has had more revenue than expenditure (a profit ) or vice versa (loss) .,1.5 the main elements of financial report,Chapter 2 The regulatory framework2.1 the regulatory system,National legislation,Accounting concepts and individual judgement,Accounting standards,Other international influences,GAAP(generally accepted accounting principles ),Fair presentation,The IASB and financial reporting,IASB(,国际会计准则理事会）,International Accounting Standards Board,Responsible for issuing IFRSs and IAS,(,国际会计准则的制定机构,),Independent private sector body,The structure of IASB,国际财务报告解释委员会,（,IFRIC,）,国际会计准则理事会,（,IASB,）,准则咨询委员会,（,SAC,）,IASC,基金会,(IASCF),The objective of the IASB,Develop a single set of global accounting standards,To promote the rigorous application of those standards,To bring about convergence of national standards,致力于：对国际会计准则的研究与制定工作,联合各国会计准则制定机构，实现会计准则的国际趋同。,SAC: (,准则咨询委员会）,Standards Advisory Council,IFRIC:,（国际财务报告解释委员会）,International Financial Reporting Interpretations Committee,IASCF,：,(,国际会计准则委员会基金会）,International Accounting Standards Committee Foundation,IMF,： （国际货币基金组织）,International MonetaryFund,International Harmonisation,IASB,近年来倾向于逐步缩小会计处理方法的选择余地。,欧盟所有成员国将于,2005,年,1,月,1,日起采用国际财务报告准则编制合并报表,(consolidated accounts),，澳大利亚、俄罗斯等国也有类似决定。,是一些国家制定本国准则的基础（如我国）,Chapter 3 Accounting conventions,Criticisms of accounting cinventions,Bases of valuation,2,3,4,The IASBs Framewok,1,IAS 1,IAS,1: Presentation of Financial Statements,The,IASBs,Framework,Framework VS. Standards,基本指导思想,-framework,具体实施规范,-standards,T,he framework is not an IFRS and so does not overrule any individual IFRS .,I,n the cases of conflict between an IAS and the framework,the IAS or IFRS will,prevail . (p36),Sources of accounting conventions,2. Conventions involved in IAS1,2.1 Objective of IAS1,2.2 Purpose of financial statements,2.3 The most important concepts:,Fair presentation,Compliance with,IASs,/,IFRSs,Fair,presentation (true and fair view),Financial statements should be ”fairly presented”(,公允列报）,Compliance with IASs/IFRS,Departure from the IAS/IFRS is requied when management dicides that compliance with a requirement of an IAS/IFRS would be misleading.,2.4 Qualitative characteristics of financial,statements(both in framewok and IAS1),Relevance,Reliability,Comparability,understandability,2.4.1,Relevance(P38),Relevance is one of the two basic requirements that financial information must have. (the other is reliability).,Only relevant information can be useful,financial,information is relevant if it can assist users decision-making by help them to evaluate past , present or future events,.,2.4.2 Reliability,To be reliable, it must be free from bias and error.,The subsidiary qualities that make information reliable are:,Fair presentation,Substance over form,Neutrality,Prudence,completeness,2.4.2.1 Substance over form,some transactions have a real nature that differs from their legal form.,It indicate that transactions are accounted for in accordance with their,substance and economic reality,and not with its legal form.,Information must be,free from bias,to be,reliable. Neutrality is lost if the financial statements are prepared so as to influence the userer to make a judgement or decision in order to achieve a predetermined outcome.,2.4.2.2 Neutrality,2.4.2.3,Prudence(P32),caution must be exercised in preparing financial statement and in estimating the outcome of uncertain events.,such that assets or income are not overstated and liabilities or expenses are not understated.,This does not mean ,however, that the approach should be over-cautious,.,(P39),example,Which of the following explanations of the prudence concept must closely follows that in the IASB s framework?,A. the application of a degree of caution in exercising judgment under conditions of uncertainty,B. revenue and profits are not recognised until realised ,and provision is made for all known liabilities,Continue,C. All legislation and accounting standards have been complied with,D. understatement of assets or gains and overstatement of liabilities or losses,Answer : A,2.4.2.4 Completeness,The information in financial statements must be complete within the restrictions of materiality and cost.,Omission may cause information to be misleading.,Listed below are some characteristics of financial information.,(1)Neutrality (2) Prudence,(3) Completeness (4) Timeliness,Which of these characteristics contribute to reliability, according to the,IASBs,Framework for the Preparation and Presentation of Financial Statements?,A (1), (2) and (3) only B (1), (2) and (4) only,C (1), (3) and (4) only D (2), (3) and (4) only,Dec 02- Q12,2.4.3 Comparability,financial statement should be,comparable with,the financial statements of,other companies,and with the financial statements of,the same company for earlier periods.,To achieve comparability we need consistency and disclosure of accounting policies,If a company changes its accounting policies there must be full disclosure of the effect of the change.,2.4.4 Understandability,An essential quality of the information provided in financial statements is that it should be,readily understandable by users,.,Understandability is dependent upon users abilities,Complex matters should not be left out of financial statements simply due to its difficult if it is relevant information .,2.5 Some,other important conceptfrom IAS1,Materiality and,aggregation(P31),This is a threshold quality. If information could influence users decisions ,it is material.,In the income statement an item is normally regarded as material.,To assess whether or not an item is material ,the value of the item and the context are all important.,2.6,The,fundamental assumption,Fair presentation,Going,concern,Accruals,Consistency,2.6.1,Going concern,The going concern assumption is that an enterprise will,continue in operational existence for the foreseeable future.,The entity has neither the intention nor the necessity of liquidation or of curtailing materially the scale of its operations.,The main significance is that the assets should not be vlued at their “break-up”value,2.6.2,Accruals,The accruals basis of accounting means that assets, liabilities, equity, income and expense are recognized when they occur and not when cash is received or paid.,Matching convention,revenue must be matched against the expenditure incurred in earning it.,2.6.3,Consistency,The presentation and classification of items in the financial statements should be retained from one period to the next,Except as follows:,There is a significant change in the nature of the operations.,A change is required buy an,IFRs,2.7,Offsetting,Assets,and liabilities can not to be,offset.,Income and expenses can be offset only when one of the following applies:,An IFRS requires,Gains, losses and related expenses arising from the same transactions are not material,3. The IASB s framework,Key elements:,Financial statements should provide useful information to users,Financial position is show in the,statement of financial position,Financial performance is show in the income statement,Changes in the financial position are shown in the cash flow statement,Continue.,The main underlying assumption are :,Accruals,Going,concern,Business entity concept,Financial statement should be :,Understandable,Relevant,Reliable,Comparable,business entity (Reporting entity ),The entity concept requires that a business is treated as being separate from its owners.,is,an entity for which there are users who rely on the financial statements as their major source of financial information about the entity.,p38,3.19,Concept,of capital and capital maintenance,Financial capital maintenance,(,财务资本保全）,Physical capital maintenance,(,实物资本保全）,3.15 Constraints on relevant and reliable information,Timeliness,Financial statements should be produced within a time interval that enables users to make relevant economic decisions,越及时的信息相关性越好，但可能没有对信息作出完整的证实，因而失去一定的可靠性,Balance between benefits and cost,这说明会计信息的提供其实并非越相关可靠就越应加以提供，它需要在效益和成本之间加以权衡，以符合经济利益最大化的目标。,4 Criticisms of accounting convention,4.1 criticisms of the Prudence concept,With accruals,With going concern,With consistence,4.2 criticisms of the Accruals assumption,With historical,5 bases of valuation,Historical cost (,历史成本）,Replacement cost,（重置成本）,Net realisable value,（可变现净值）,Economic value,（经济价值）,5.5,Disadvantages of Historical cost,Advantabes:,Can be proved (eg. by the invoice),Disadvantages,Non-current asset value are unrealistic through inflation,Depreciation is inadequate to finance the replacement of non-current assets,It overstates profits when prices are rising through inflation,