Podcast
Questions and Answers
When is revenue recognized according to the revenue recognition principle?
When is revenue recognized according to the revenue recognition principle?
Which principle specifies that expenses must be recorded in the same period as the revenues they generate?
Which principle specifies that expenses must be recorded in the same period as the revenues they generate?
What does the historical cost principle dictate regarding asset valuation?
What does the historical cost principle dictate regarding asset valuation?
What is the purpose of the full disclosure principle in accounting?
What is the purpose of the full disclosure principle in accounting?
Signup and view all the answers
Under the materiality principle, what qualifies as 'material' information?
Under the materiality principle, what qualifies as 'material' information?
Signup and view all the answers
What is the primary assumption underlying the going concern principle?
What is the primary assumption underlying the going concern principle?
Signup and view all the answers
What does the separate business entity assumption imply?
What does the separate business entity assumption imply?
Signup and view all the answers
Which of the following accounting standards is considered a rule-based standard?
Which of the following accounting standards is considered a rule-based standard?
Signup and view all the answers
Which accounting principle assumes a stable currency over time?
Which accounting principle assumes a stable currency over time?
Signup and view all the answers
What is the significance of preparing financial reports for specific periods?
What is the significance of preparing financial reports for specific periods?
Signup and view all the answers
What does the going concern assumption entail for businesses?
What does the going concern assumption entail for businesses?
Signup and view all the answers
What is the primary focus of the accrual principle?
What is the primary focus of the accrual principle?
Signup and view all the answers
Which organization plays a critical role in issuing Malaysian Financial Reporting Standards?
Which organization plays a critical role in issuing Malaysian Financial Reporting Standards?
Signup and view all the answers
Which principle requires businesses to provide additional details that impact financial data?
Which principle requires businesses to provide additional details that impact financial data?
Signup and view all the answers
Why is ethical behavior crucial in the accounting profession?
Why is ethical behavior crucial in the accounting profession?
Signup and view all the answers
What aspect do IFRS promote in global financial reporting?
What aspect do IFRS promote in global financial reporting?
Signup and view all the answers
Which of the following is not a basic principle of accounting standards?
Which of the following is not a basic principle of accounting standards?
Signup and view all the answers
What role does the International Federation of Accountants (IFAC) have regarding accounting standards?
What role does the International Federation of Accountants (IFAC) have regarding accounting standards?
Signup and view all the answers
What key role does the IASB serve in international accounting?
What key role does the IASB serve in international accounting?
Signup and view all the answers
What is a characteristic of Generally Accepted Accounting Principles (GAAP)?
What is a characteristic of Generally Accepted Accounting Principles (GAAP)?
Signup and view all the answers
What is the primary aim of the International Accounting Standard Board (IASB)?
What is the primary aim of the International Accounting Standard Board (IASB)?
Signup and view all the answers
Which of the following is NOT a key role of the Malaysian Institute of Accountants (MIA)?
Which of the following is NOT a key role of the Malaysian Institute of Accountants (MIA)?
Signup and view all the answers
How many members does the Association of Chartered Certified Accountants (ACCA) have approximately?
How many members does the Association of Chartered Certified Accountants (ACCA) have approximately?
Signup and view all the answers
Which qualification is offered by the Institute of Chartered Accountants in England & Wales (ICAEW)?
Which qualification is offered by the Institute of Chartered Accountants in England & Wales (ICAEW)?
Signup and view all the answers
What is a significant aspect of the ACCA qualification?
What is a significant aspect of the ACCA qualification?
Signup and view all the answers
What does MIA stand for in the context of accounting bodies?
What does MIA stand for in the context of accounting bodies?
Signup and view all the answers
What was the year of establishment for the Institute of Chartered Accountants in England & Wales (ICAEW)?
What was the year of establishment for the Institute of Chartered Accountants in England & Wales (ICAEW)?
Signup and view all the answers
Which of these accounting bodies provides certification to accountants?
Which of these accounting bodies provides certification to accountants?
Signup and view all the answers
Why is IFRS significant in financial reporting?
Why is IFRS significant in financial reporting?
Signup and view all the answers
What type of support does ICAEW provide to its members?
What type of support does ICAEW provide to its members?
Signup and view all the answers
Study Notes
Accounting Principles
-
Accrual Principle: Financial transactions are recorded when they occur, not when cash changes hands. This means revenue is recognized when earned and expenses are recognized when incurred, regardless of cash flow.
-
Revenue Recognition Principle: Revenue is recognized when it's earned, not when payment is received. If goods are delivered in December but payment is received in January, the revenue is recorded in December.
-
Matching Principle: Expenses are recorded in the same period as the revenues they help generate. This ensures a proper match between income and related costs. For example, if goods are sold in December, the cost of those goods should also be recorded in December.
-
Historical Cost Principle: Assets are recorded at their original cost, not their market value. This provides a reliable and verifiable record of transactions. If a building is bought for RM500,000, it's recorded at that cost, even if the market value changes later.
-
Full Disclosure Principle: All relevant financial information must be disclosed, including any additional details that impact financial data. This includes details like lawsuits, even if the lawsuit hasn't yet affected financial figures.
-
Materiality Principle: Information is material if its omission could influence decisions. Only significant items are disclosed. Small expenses that don't impact decision-making might be ignored, while significant expenses must be reported.
Accounting Assumptions
-
Separate Business Entity: A business is treated as separate from its owners or other businesses. Financial transactions are recorded separately from personal or organizational transactions.
-
Monetary Unit: Financial transactions are recorded in a stable currency. This assumption ignores the effects of inflation or deflation. Transactions not measurable in monetary units aren't recorded.
-
Time Period: Reports are prepared for specific periods, like monthly, quarterly, or annually, to allow for timely reporting and analysis of financial performance
-
Going Concern: The business is expected to continue operating in the foreseeable future. This allows the deferral of recognizing certain expenses and revenues until future periods.
Accounting Standards
-
International Financial Reporting Standards (IFRS): Issued by the IASB, IFRS promotes global harmonization of financial reporting making it easier for investors to compare statements across borders. IFRS is widely used across 140+ countries, including Malaysia . It's a principle-based standard.
-
Generally Accepted Accounting Principles (GAAP): Based in the US, GAAP sets accounting standards which are issued by the Financial Accounting Standards Board (FASB). GAAP is a rule-based standard, and there are ongoing efforts to converge US GAAP with IFRS to create a unified, global accounting framework.
-
Malaysian Financial Reporting Standards (MFRS): Based on IFRS, MFRS governs financial statement preparation in Malaysia. The Malaysian Accounting Standards Board (MASB) is responsible for issuing these standards.
Ethical Standards
- Code of Ethics: Accounting bodies uphold ethical practices within the profession. The code of ethics sets principles that guide professional behavior by ensuring that accountants act with integrity, objectivity, and professionalism. The importance of ethics is especially critical given the financial crises and corporate scandals.
Accounting Bodies
-
Global:
-
International Federation of Accountants (IFAC): Prompts international convergence of standards, backs professional organizations, and highlights sustainability and ethical practices.
-
International Accounting Standards Board (IASB): Establishes global accounting standards for financial reporting and aims for transparency and comparability across borders.
-
-
Regional & National (Examples):
-
Malaysian Institute of Accountants (MIA): A statutory body that regulates the accounting profession in Malaysia. It ensures compliance with local laws, and develops ethical/professional standards for accountants. MIA membership is required for accountants to practice in Malaysia.
-
Association of Chartered Certified Accountants (ACCA): A global professional body focusing on providing the ACCA qualification, with emphasis on both management and financial accounting expertise, and promoting international career mobility.
-
Institute of Chartered Accountants in England & Wales (ICAEW): One of the oldest accounting bodies worldwide(established in 1880) it offers the ACA qualification, and supports ongoing member development. They provide seminars, conferences and courses which focus on financial reporting, auditing, assurance and advisory services.
-
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Related Documents
Description
This quiz covers fundamental accounting principles such as the Accrual Principle, Revenue Recognition Principle, Matching Principle, and Historical Cost Principle. Understanding these concepts is vital for accurate financial reporting and analysis.
