Financial Accounting and Reporting Questions and answers all correct
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Course
FAC1601 - Financial Accounting & Reporting
Institution
FAC1601 - Financial Accounting & Reporting
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the International Accounting Standards Committee (IASC) Foundation and is the parent entity of
the IASB. The IFRS Foundation publishes and promotes IFRS. Its mission statement is 'to
develop IFRS Standards that bring transparency, accountability and efficiency to financial
markets around the ...
Describe the regulatory environment for financial reporting in Australia and the reasons for
accounting and reporting requirementsAnswer ✔✔In Australia, the form and content of
company financial statements is regulated by the Corporations Act 2001
and by Australian Accounting Standards. The Australian Accounting Standards Board adopted
the IFRSs for Australian entities required to report under the Corporations Act 2001 (Cwlth)
(Corporations Act) for annual reporting periods beginning on or after 1 January 2005.
Discuss the main types of business entity and explain the reasons for selecting each structure
Answer ✔✔There are 3 main types of business entity:
1. Sole traders;
2. Partnerships; and
3. Limited liability companies.
Sole Trader Answer ✔✔Sole traders are people who work for themselves. Examples may
include the local shopkeeper, a
plumber and a hairdresser. The term sole trader refers to the ownership of the business - sole
traders
can have employees.
Partnership Answer ✔✔Partnerships occur when two or more people decide to run a business
together. Examples may include an accountancy practice, a medical practice and a legal practice.
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,LLC Answer ✔✔Limited liability companies are incorporated to take
advantage of 'limited liability' for their owners
(shareholders). This means that, unlike sole traders and partners, who are personally responsible
for the amounts owed by their business, the shareholders of a limited liability company are only
responsible for the amount unpaid on their shares.
Identify different types of accounting regulation, including laws, Generally Accepted Accounting
Principles and International Financial Reporting Standards Answer ✔✔
Explain how the requirements from users, together with social and environmental developments,
impact the underlying principles and requirements of financial reporting and the desire to
establish a single set of international accounting standards Answer ✔✔
Describe the role of the International Accounting Standards Board in developing a regulatory
framework and explain how new policies and standards are established Answer ✔✔The
International Accounting Standards Board (IASB) develops and issues International Financial
Reporting Standards (IFRS). As IFRS have no jurisdiction, and the IASB has no authority to
impose accounting standards, individual countries draw up their own accounting regulations. In
practice, national governments often adopt IFRS and then adapt them to operate together with
local laws and regulations as necessary.
Identify the purpose of a conceptual framework and the key characteristics in the Generally
Accepted Accounting Principles (GAAP) and apply this knowledge to define and recognise the
different elements of the financial statements Answer ✔✔-The regulatory framework consists
of accounting rules and company law.
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, - The regulatory framework ensures that general purpose financial reporting produces relevant
and reliable information and therefore meets the needs of shareholders, lenders and other users.
Describe and demonstrate the role of accounting standards and accounting policies in fairly
presenting the financial performance and financial position of an entityAnswer ✔✔
Accounting standardsAnswer ✔✔Accounting standards are a form of accounting regulation.
In an attempt to deal with some of the subjectivity that may occur in producing financial reports
and to achieve comparability between different organisations, accounting standards were
developed. These standards are developed at both a national level (in most countries) and an
international level. In this Study guide we are concerned with International Accounting
Standards (IAS) and International Financial Reporting Standards (IFRS).
IASBAnswer ✔✔The International Accounting Standards Board
is the standard-setting body and is an independent privately-funded accounting standard setter
based in London. It is a part of the International regulatory framework, reporting to the IFRS
Foundation.
The International Accounting Standards Board:
which is responsible for setting International Financial Reporting Standards (IFRS).
IFRS and IFRS FoundationAnswer ✔✔International Financial Reporting Standards
The IFRS Foundation is an independent, not-for-profit private sector organisation working in the
public interest. It was founded in March 2001 as
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