cash vs cash equivalents
Cash on hand is all the notes and coins held, and deposits at financial
institutions. Cash equivalents are highly liquid investments and borrowings that are part of cash
management and not subject to a term facility. Highly liquid investments are those that have
short terms to maturity, are readily converted to cash at the investors’ option and have a low
risk of changing in value
management accounting
Details of all transaction and events, tailored reports generated from the accounting system (weekly sales reports, monthly profit or loss)
financial accounting
General purpose Financial Reports
- Financial statements and notes in company reports
Sustainability reports
Relevance (and materiality)
- Info is relevant if it is capable of making a difference to the decision made by users
Info is capable of making a difference if has predicative value ( x necessarily a prediction), confirmatory value (feedback about previous evaluations of predictions) or both - Info is material if omitting, misstating, or obscuring it could reasonably be expected to influence decisions that the primary users of GPFR make on the basis of those reports, which provide information about a specific reporting entity.
faithful rep
Fin. Statements must faithfully represent the phenomena it purports to represent.
Must be complete, neutral and free from error
Comparability
- Information should be comparable with other entities/other reporting periods
- Consistent application of accounting policies assists comparability
Verifiability
- means different knowledgeable and independent observers could reach consensus (not necessarily complete agreement) that a particular depiction is a faith.rep
Timeliness
- having info available in time to be capable of influencing decisions
Understandability
- presenting clear and concise information
- assumes user have reasonable knowledge or access to someone else who does
going concern
the FS are prepared on the assumption the entity will continue in operation for the foreseeable future, with neither the intention nor need to liquidate.
Asset
a present economic resource controlled by the entity as a result of past events as an economic resource is a right that has the potential to produce economic benefits.
Liability
to present obligation of the entity to transfer an economic resource as a result of past events.
Equity
the residual interest in the assets of the entity after deducting all its liabilities.
Income
increase in assets or decrease in liabilities, that results in increases in equity, other than those relating to contributions from holders of equity claims.
expenses
dec. in assets or inc. in liabilities that result in a decrease in equity other than those relating to distributions to holders of equity claims.
Historical Cost
-> the transaction price or value at time of recognition
Value is use?
present value of future cash flows generated from use and ultimate disposal
Fair Value
-> the market price (selling price)
public companies
- A company that’s not a propriety company
- Minimum one shareholder, no maximum
- Mostly limited companies (Ltd or PLC)… liability is limited to unpaid amounts on issued shares
- No restrictions on raising capital from public… must be accompanied by a disclosure document / may be listed on a local securities exchange (e.g ASX)
- No restriction on transfer of ownership… if listed, then shares are traded via the ASX
