Financial Accounting Fundamentals Quiz

Focus of Financial Accounting

• The primary focus of financial accounting is to provide financial information to external users, such as investors, creditors, and regulatory bodies, to facilitate informed decision-making.

Stakeholders in Financial Accounting

• Examples of stakeholders interested in financial accounting information include:
  • Investors, who rely on financial statements to assess investment opportunities
  • Creditors, who use financial information to evaluate creditworthiness
  • Regulatory bodies, which oversee compliance with laws and regulations
  • Suppliers, who assess a company's creditworthiness before extending credit
  • Employees, who use financial information to evaluate their employer's performance

Framework of Guidelines

• The standard framework of guidelines for financial accounting used in any given jurisdiction is Generally Accepted Accounting Principles (GAAP)

International Financial Reporting Standards (IFRS)

• IFRS is a set of standards and guidelines for financial reporting, employed in over 100 countries, aiming to ensure consistency and comparability of financial statements across countries and industries
• IFRS provides a common language for financial reporting, enhancing transparency and facilitating international investment and trade

Governance of Financial Accountancy

• The governance of financial accountancy is overseen by local and international bodies, such as:
  • Financial Accounting Standards Board (FASB) in the United States
  • International Accounting Standards Board (IASB)
  • Local regulatory bodies, ensuring adherence to standards and rules