Financial Statement Elements
A present economic resource, controlled by the entity as a result of a past transaction or event, with the potential for future economic benefits.
What are Assets?
Accounting information must be capable of making a difference in a decision.
What is Relevance?
The act of taking something off the statement of financial position or income statement.
What is derecognition?
The process of legally structuring a business arrangement or transaction so that it meets the company’s financial reporting objectives.
What is Financial Engineering?
Information of sufficient quality and clarity that it allows reasonably informed users to see its significance.
What is Understandability?
The residual interest in an entity also known as net worth.
What is Equity?
Information that faithfully reflects or represents the underlying economic substance of an event or transaction, not just its legal form.
What is Representational Faithfulness?
This term implies that an enterprise’s economic activities can be divided into artificial time periods.
The anchor that should ground all financial reporting decisions.
What is the Accounting Conceptual Framework?
Information should be available to decision‐makers before it loses its ability to influence their decisions.
What is Timeliness?
Under ASPE, increases in equity from an entity’s peripheral or incidental transactions, except those that result from revenues or investments by owners.
What are Gains?
The concept that information should not be selected to favour one set of interested parties over another.
What is Neutrality?
The assumption that a business enterprise will continue to operate for the foreseeable future.
What is the Going Concern Assumption?
The intentional overstatement and – or – understatement of balances in the financial statements.
What is Fraudulent Financial Reporting?
Knowledgeable, independent users achieve similar results or reach consensus regarding the accounting for a particular transaction.
What is Verifiability?
Under IFRS, increases in assets or decreases in liabilities (that result in increases to equity) other than those relating to contributions from shareholders.
What are Revenues?
The inclusion or omission of a piece of quantitative or qualitative information would make a difference to a knowledgeable user's decision.
What is Materiality?
Information that is important enough to influence an informed user’s judgement and decisions.
What is the Full Disclosure Principle?
Targets that create pressure on organizations and individuals that may lead to inappropriate accounting decisions.
What are budgets?
A constraint on financial reporting that the costs of obtaining and providing information should not be greater that the benefits gained by providing it.
What is the Cost-Benefit Relationship (Cost Constraint)?
Under ASPE, decreases in economic resources, either by outflows or reductions of assets or by the incurrence of liabilities that result from an entity’s ordinary revenue‐generating activities.
What are Expenses?
The idea that the statements should include all information needed to portray the underlying events and transactions.
The accounting principle that dictates that effort be matched with accomplishment whenever this is reasonable and can be done.
Systems that are put in place to ensure strong financial reporting.
What are internal control systems?
Information that has been measured and reported in a similar way (both company to company and consistently from year to year).
What is Comparability?