Înapoi la: ACCA – Financial Accounting 🟥
In this lesson you will learn:
- what is financial information and what we mean by financial reporting
- what are the types of companies and what are the related financial reporting needs
- who are the stakeholders of a company
- what is the main purpose of financial reporting
- what are the main principles of financial accounting
Let’s start with a story
Financial information
Types of businesses
Users of financial information
The Conceptual Framework
You can find the source of the above information here: IFRS Organisation’s site
International Financial Reporting Standards
Corporate Governance
This lesson in a nutshell:
The main purpose of financial reporting is to allow users to make educated decisions.
Even as a sole trader, the business must be seen as a separate entity from its owner.
The businesses are categorised considering their size, the finances they have/they are able to have, the liability of their owners, the way they are managed.
The stakeholders are anyone who may affect the business or who might be affected by the business. They are the users of financial information.
The Conceptual Framework ensure the financial information is useful in the decision-making process, which means that the financial information must:
- present the financial position and performance true and fair
- be compliant with relevant laws and regulations
- be compliant with relevant financial reporting standards
- have the qualitative characteristics of useful financial information
IFRS are developed and published by IAS Board together with their interpretation.
IFRS Foundation ensure proper founding for all bodies involved in development, promotion and understanding of IFRS.
IAS Interpretation Committee reviews the accounting issues and provide guidance for them.
IFRS Advisory Council advise IFRS Board on their agenda and prioritise their work
The Corporate Governance suppose the separation between an entity owners (the shareholders) and its managers (the Board of Directors or similar), hence the need for a good financial information.
A sound corporate governance is characterised by:
- effective management
- effective system of internal control
- oversight management by non-executive directors
- fair appraisal of directors performance
- fair remuneration of directors
- constructive relationships with shareholders
Dictionary:
IFRS = International Financial Reporting Standards = Standardele Internationale de Raportare Financiara
IAS = International Accounting Standards = Standardele Internationale de Contabilitate
sole trader = freelancer = the smallest business we might have, owned and run by one individual, usually without any employee
Stakeholder = anyone who may affect the business or who might be affected by the business
You know it!
You know it!
This lesson is not to be considered complete until you successfully solve the questions below 🙂
Use what you learned in this lesson and what you know from before and try your best!
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IMPORTANT!
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If you really wish to test your understanding and to ensure you retain all the concepts try it at least 4 times (or until you receive no more new questions 😉 )!
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