Fundamentals of Financial Accounting I
I is an information system. Its main objective provide useful information for the user to make appropriate decisions
What is financial accounting?
Assets and liabilities expected to be recovered or settled in a period exceeding 12 months
Non-current (or long-term) items
Current obligations arising from past events, the settlement of which is expected to result in the company giving up resources that may produce benefits or economic returns in the future
What are liabilities?
They are the individuals or entities responsible for certifying to third parties that financial statements are free from material misstatements.
Who are auditors?
Includes the identification, recognition, measurement, presentation and disclosure of economic events to enable users of information to make timely and appropriate decisions
What is the accounting process?
Economic resources with economic value controlled by the entity, which is expected to provide a future benefit
What are assets?
It includes contributions made, either at the time of its incorporation or at later stages, by its shareholders or owners that are not considered liabilities, as well as accumulated results or other variations affecting it
What is equity?
Set of international rules for presenting companies’ financial statements
What are the IFRS?
Decreases in assets or increases in liabilities during the period that result in decreases in equity other than those relating to distributions to holders of equity claims.
What are expenses?
Balance sheet, income statement, statement of changes in equity, cash flow statement, notes to the financial statements
What are the financial statements?
Increases in the company’s equity during the financial year, either in the form of inflows or increases in the value of assets, or decreases in liabilities (not originate from monetary or non-monetary contributions by shareholders or owners)
What is income?
It was a case of accounting and financial fraud that led to stricter laws on financial reporting (implementation of the Sarbanes-Oxley Act in the U.S.).
What was the Enron case?