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Objective: ACCT1511 Topic 1 Rules and Principles
Objective: ACCT1511 Topic 1 Rules and Principles
Australian
School of
Business
Objective
Australian
School of
Business
ACCT1511
Topic 1
Additional Material
Australian
School of
Business
Australian
School of
Business
Components of GAAP
Framework for the Preparation and Presentation of Financial
Statements (The Framework)
Australian
School of
Business
Accounting Standards
Australian
School of
Business
Accounting standards
Corporations Law
From 2005 AASB adopted most of the content and wording of the
IFRSs: Harmonisation
Dr Per Tronnes
3/03/2014
Australian
School of
Business
Australian
School of
Business
slides)
Having a set of rules can increase accuracy and reduce the
ambiguity that can trigger aggressive reporting decisions by
management.
Problems: The complexity of rules, however, can cause
unnecessary complexity in the preparation of financial statements.
Precise requirements can sometimes compel managers to
manipulate the statements to fit what is compulsory.
Australian
School of
Business
Australian
School of
Business
States the:
Objective of general purpose financial reporting
The qualitative characteristics that determine the usefulness of
information in financial statements;
The definition, recognition and measurement of the elements from
which financial statements are constructed; - i.e. assets, liabilities,
equity, expenses and revenue
Australian
School of
Business
Dr Per Tronnes
Australian
School of
Business
3/03/2014
The Framework
Australian
School of
Business
Understandability
Australian
School of
Business
That does not mean that we exclude things just because they
are complex.
Relevance
Australian
School of
Business
Relevance
Australian
School of
Business
Relevance
Australian
School of
Business
Reliability
Australian
School of
Business
Dr Per Tronnes
3/03/2014
Australian
School of
Business
Australian
School of
Business
Australian
School of
Business
Australian
School of
Business
Australian
School of
Business
Australian
School of
Business
Dr Per Tronnes
3/03/2014
Australian
School of
Business
Reliability - Completeness
Australian
School of
Business
Comparability
Australian
School of
Business
Australian
School of
Business
Australian
School of
Business
Australian
School of
Business
Dr Per Tronnes
3/03/2014
Australian
School of
Business
Matching Principles
Australian
School of
Business
Going Concern
Australian
School of
Business
Dr Per Tronnes
Accruals Concept
Australian
School of
Business
Australian
School of
Business
Economic Entity
Australian
School of
Business
3/03/2014
Monetary unit
Australian
School of
Business
Historical Costs
Australian
School of
Business
Accounting period
Australian
School of
Business
The time span in which certain financial events took place. The
accounting period is generally a quarter or a year and reflects all of
the financial activity that occurred during that time.
While accounting periods vary in terms of reporting dates, they must
be consistent. If one accounting period ends on June 30, the next
must begin on July 1. From an investing standpoint, the accounting
period is important because it lets potential shareholders compare
apples to apples.
But it should be appreciated that there is a certain arbitrariness to
this way of slicing up the entitys life.
Australian
School of
Business
Dr Per Tronnes