Exam summary – F&A Finance and Accounting
Contents
Chapter 14 – Introduction to Accounting and Finance.......................................................................2
Chapter 15 – Measuring and Reporting Financial Position.................................................................5
, Chapter 14 – Introduction to Accounting and Finance
Accounting Concerned with collecting, analyzing and communicating financial information.
Aim To help those using this information to make more informed decisions.
Finance (financial management) Concerned with the ways in which funds for a business are raised
and invested.
For business, Critical that they raise and invest money in the most efficient and effective way.
Understanding of finance helps identifying:
o Main forms of finance available.
o Costs and benefits of each of finance.
o Risks associated with each form of finance.
o Role of financial markets in supplying finance.
- The users/stakeholders of Accounting Information:
- For accounting to be useful, it must be clear for whom and for what purpose the information will be
used.
- Accounting can be viewed as a form of service as it involves providing financial information to
various users.
-To provide a use service, accounting must possess certain qualities, or characteristics:
Relevance Accounting information should make a difference.
o Capable of influencing user decisions.
o Help predict future events and confirm past events, or both.
o To be relevant cross threshold of materiality Item is considered, or significant,
if its omission or misstatement would change decisions that user make.
Faithful representation Accounting information should represent what it is meant to
represent.
o Information provided must reflect the substance of what has occurred rather than
simply its legal form.
o To provide perfectly faithful representation Information should be complete.
Comparability User of accounting seek to make comparisons.
Verifiability Provides assurance to users that the accounting information provided
faithfully portrays what is it supposed to portray.
Timeliness Accounting information should be made available in time for users to make their
decisions.
Understandability Accounting information should be presented in as clear and as concise
a form as possible.
Contents
Chapter 14 – Introduction to Accounting and Finance.......................................................................2
Chapter 15 – Measuring and Reporting Financial Position.................................................................5
, Chapter 14 – Introduction to Accounting and Finance
Accounting Concerned with collecting, analyzing and communicating financial information.
Aim To help those using this information to make more informed decisions.
Finance (financial management) Concerned with the ways in which funds for a business are raised
and invested.
For business, Critical that they raise and invest money in the most efficient and effective way.
Understanding of finance helps identifying:
o Main forms of finance available.
o Costs and benefits of each of finance.
o Risks associated with each form of finance.
o Role of financial markets in supplying finance.
- The users/stakeholders of Accounting Information:
- For accounting to be useful, it must be clear for whom and for what purpose the information will be
used.
- Accounting can be viewed as a form of service as it involves providing financial information to
various users.
-To provide a use service, accounting must possess certain qualities, or characteristics:
Relevance Accounting information should make a difference.
o Capable of influencing user decisions.
o Help predict future events and confirm past events, or both.
o To be relevant cross threshold of materiality Item is considered, or significant,
if its omission or misstatement would change decisions that user make.
Faithful representation Accounting information should represent what it is meant to
represent.
o Information provided must reflect the substance of what has occurred rather than
simply its legal form.
o To provide perfectly faithful representation Information should be complete.
Comparability User of accounting seek to make comparisons.
Verifiability Provides assurance to users that the accounting information provided
faithfully portrays what is it supposed to portray.
Timeliness Accounting information should be made available in time for users to make their
decisions.
Understandability Accounting information should be presented in as clear and as concise
a form as possible.
