Exam (elaborations) ANCC

FINANCIAL ACCOUNTING CONCEPTS;PROCEDURES AND
CONCEPTS

1.ACCOUNTING:Planning;Recording;Analyzing;Interpretingfinancial
informa- tion.
2.PLANNING DECISIONS:Financial information is used to determine
future ac-
tions.Historicalinformationprovidedbytheaccountingprocessservesasab
asis for forecasting.
3.CONTROL:Usingfinancialinformationtoevaluatetheresultsoffinancialac
tivi- ties.
4.THEFUNCTIONOFACCOUNTING:1.Thevalueaddedtothenetworthofa
person/entity during a particular period.
2.Theaccumulated networthofthatperson/entity
5.PROFITENTITIES:Soletraders;Partnerships;CloseCorporations;Companie
6.NON-
PROFITENTITES:Clubs;CharitableOrganisations;Churches;Education- al
Institutions; Trusts
7.PUBLICSECTOR:TheGovernment;Provinces;Departments;BoardsandC
om- missions; Municipalities
8.USERSOFFINANCIALINFORMATION:1.Investors-Providersofcapital.
Con-
cernedwiththeriskinvolvedintheirinvestment.Needinformationtodecidewh
ether to invest, hold, or withdraw funds.

2.Employees-
Interestedinentity'sstabilityandprofitabilityforbenefitsandjob security.

1/23

, FINANCIAL ACCOUNTING CONCEPTS;PROCEDURES AND
CONCEPTS

3.Lenders-
Usefinancialinformationtodetermineifloanscanbepaidbackwith interest.

4.Suppliersandothertradecreditors-
Useinformationsforassurancethatamounts owed are paid on time.

5.Customers-Needtoknowthestateoftheentityforreliability.

6.Governmentandtheiragencies-
Usefinancialinformationfortaxation,policies, and statistical purposes.

7.Public-
Entitiesoftencontributetothelocaleconomybyemployingpeopleand local
structures:
9.STATEMENTOFPROFITORLOSSANDOTHERCOMPREHENSIVEIN-
COME:Financialresults-->FinancialPerformance(financialperiod)---
>Financial Position




2/23

, FINANCIAL ACCOUNTING CONCEPTS;PROCEDURES AND
CONCEPTS

10.STATEMENTOFCHANGESINEQUITY:Reflectstheprofitortotalcomprehen
- sive income and reflects the capital or equity.
11.STATEMENTOFFINANCIALPOSITION:Reflectsthenetworthoftheentityat
aspecifictime.Determinedintermsofassetsandinterests.Affectedbytheenti
ty's economic resources, structure, liquidity, solvency, capacity to adapt
to economic changes.
12.STATEMENTOFCASHFLOWS:Theabilitytogeneratecashwilldetermin
e whether the entity will be able to meet its economic comittments.
13.DOMAINSOFACCOUNTING:1.Financialaccounting:Externalusers-
Credi- tors; Clients; Banking institutions.
2.Managementaccounting:Internalusers-Management;Personnel
14.ACCOUNTINGPRINCIPLES:Thetechniquesusedinthepracticeofaccount
- ing. Conceptual and Theoretical.
15.ACCOUNTINGPOLICY:Asetofdecisionsabuthowtheentitywillhandlethe
same type of transaction in order to achieve consistency.
16.INTERNATIONALFINANCIALREPORTINGSTANDARDS(IFRS):Ageneral
frameworkandaccountingconcepts;pricinciples;methodsandprocedures.
17.ACCOUNTINGSTANDARDSANDSTATEMENTS:Aimtoencouragewide-
spread use of particular standards to eliminate bad alternatives.
18.GOINGCONCERNASSUMPTION:assumesanentitywillremaininoperatio
n for the foreseeable future.
19.QUALITIVECHARACTERISTICSOFFINANCIALSTATEMENTS:Attributes
thatmaketheinformationprovidedinfinancialstatementsuseful.Relevance;
Faith- ful Presentation; Comparibility;Verifiability;Timeliness;
3/23