CFAS CHAPTER 5

56問 • 1年前

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Portray the financial effects of transactions and other events by grouping them into broad classes according to their economic characteristics.

financial statements

These broad classes are termed the ____

elements of financial statements

Refer to the quantitative information reported in the statement of financial position and income statement.

elements of financial statements

Are the building blocks from which financial statements are constructed.

elements of financial statements

The presentation of these elements in the statement of financial position and income statement involves the process of _____

classification and sub classification

The elements directly related to the measurement of financial position:

asset liability equity

The elements directly related to the measurement of financial performance are:

income expense

The conceptual framework identifies no elements that are unique to the ____ because such statement comprises items that appear in the statement of financial position and the income statement.

statement of changes in equity

Is the residual interest in the assets of the entity after deducting all of the liabilities.

equity

Is defined as a present economic resource controlled by the entity as a result of past events.

assets

Is a right that has the potential to produce economic benefits.

economic reasons

Is an economic resource and that the potential economic benefits no longer need to be expected to flow to the entity.

asset

Is a PRESENT economic resource.

asset

The economic resource is a RIGHT that has the POTENTIAL to produce economic benefits.

asap

The economic resource is controlled by the entity as a result of past events.

asset

RIGHTS that have the potential to produce economic benefits may take the following forms:

1. rights that correspond to an obligation of another entity 2. rights that do not correspond to an obligation of another entity 3. rights established by contract or legislation such as owning a debt instrument or an equity instrument or owning a registered patent

a. Right to receive cash B. Right to receive goods or services C. Right to exchange economic resources with another party on favorable terms D. Right to benefit from an obligation of another party if a specified uncertain future event occurs

rights that correspond to an obligation of another entity

A. Right over physical objects, such as property, plant and equipment or inventories B. Right to intellectual property

rights that do not correspond to an obligation of another entity

Is a right that has the potential to produce economic benefits.

economic reasons

A ____ can meet the definition of an economic resource even if the probability that it will produce economic benefit is low.

right

The economic resource is the ____ that contains the potential and not the future economic benefits that the right may produce.

present right

For the potential to exist, it does not need to be certain or even likely that the right will produce economic benefits.

economic resources

An _____ could produce ____ if an entity is entitled: A. To receive contractual cash flow B. To exchange economic resources with another party on favorable terms C. To produce cash inflows or avoid cash outflows D. To receive cash by selling the economic resource E. To extinguish a liability by transferring an economic resource

economic resource could produce economic benefits

An entity ____ if it has the present ability to direct the use of the asset and obtain the economic benefits that flow from it.

controls an asset

Also includes the ability to prevent others from using such asset and therefore preventing others from obtaining the economic benefits from the asset.

control

May arise if an entity enforces legal rights.

control

If there are no legal rights, _____ can still exist if an entity has other means of ensuring that no other party can benefit from an asset.

control

Example, an entity has access to technical knowhow and has the ability to keep this know how secret.

control

Is defined as a present obligation of an entity to transfer an economic resource as a result of past events.

liability

Is the obligation to transfer an economic resource and not the ultimate outflow of economic benefits.

liability

The _____ of economic benefits no longer needs to be expected similar to the definition of an asset.

outflow

essential characteristics of liability

a. the entity has an obligation b. the obligation is the transfer and economic resource c. the obligation is a present obligation that exists as a result of past event

Is it duty or responsibility that an entity has no practical ability to avoid.

obligation

Obligations can either be?

legal or constructive

Maybe legally enforceable as a consequence of a binding contract or statutory requirement.

obligations

For example, accounts payable for goods and services received.

obligation

Arise from normal business practice, custom and a desire to maintain good business relations or act in an equitable manner.

constructive obligations

For example, an entity decides as a matter of policy to rectify faults in the products even when this become apparent after the warranty period.

constructive obligations

______ include: A. Obligation to pay cash B. Obligation to deliver goods or non-cash resources C. Obligation to provide services at some future time D. Obligation to exchange economic resources with another party on unfavorable terms E. Obligation that transfer an economic resource if specified uncertain future event occurs

obligations to transfer an economic resource

An obligation exists as a result of ______ if both of the following conditions are satisfied: A. An entity has already obtained economic benefits B. An entity must transfer an economic resource

past event

Is defined as increases in assets or decreases in liabilities that result in increases in equity, other than those relating to contributions from equity holders.

income

Income and compasses both?

revenue and gains

Arises in the course of the ordinary regular activities and is referred to by variety of different names including sales, fees, interest, dividends, royalties and rent.

revenue

The essence of revenue is?

regularity

Represent other items that meet the definition of income and do not arise in the course of the ordinary regular activities.

gains

Include gain from disposal of non-current asset, unrealized gain on trading investment and gain from expropriation.

gains

Refers to the income statement and a statement presenting other comprehensive income.

statement of financial performance

Is the primary source of information about an entity's financial performance

income statement

As a general rule, all income and expenses are included in?

income or loss

In developing accounting standards, there are some items of income and expenses that are included in other comprehensive income and not in ______ if such presentation would provide more relevant and faithfully represented information about financial performance.

profit or loss

There are instances that an amount in other comprehensive income in one reporting period may be recycled to profit or loss in ____ reporting period.

another

Is defined as decreases in assets or increases in liabilities that result in decreases in equity, other than those relating to distributions through equity holders.

expense

Encompasses losses as well as those expenses that arise in the course of the ordinary regular activities.

expenses

_____ that arise in the course of ordinary regular activities include cost of goods sold, wages and depreciation.

expenses

Do not arise in the course of the ordinary regular activities and include losses resulting from disasters.

losses

Examples include losses from fire, flood, storm surge, tsunami, and hurricane, as well as those arising from disposal of non-current assets.

losses

Business Finance

Sab Sescon · 46問 · 2年前

Business Finance