29 Questions
Which of the following is NOT a primary user of accounting information?
Employees and trade unions
What is the main focus of Financial Accounting and Reporting?
Providing information about the financial position, performance, and changes in financial positions
What is the purpose of schedules and guiding notes in Financial Accounting and Reporting?
To ensure that the information is authentic and clear
Which of the following is a branch of accounting that deals with the examination and evaluation of financial statements?
Auditing
What is the role of authoritative pronouncements and regulatory rules in Financial Accounting and Reporting?
To provide guidance on the preparation of financial statements
What is the primary goal of the accounting process?
To permit informed judgments and decisions by users of the information
According to the American Institute of Certified Public Accountants, what is accounting?
The art of recording, classification and summarizing financial transactions
What is the second stage of the accounting process?
Recording those events in a systematic and chronological manner
Who are the primary users of accounting information according to the IASB Conceptual Framework for Financial Reporting?
Investors and creditors
What is the final stage of the accounting process?
Communicating the collected information to interested users
What is the purpose of classification of users of accounting information?
To identify the decision-making needs of users
Where is the origin of accounting traced back to?
Mesopotamia
Who is credited as the father of accounting?
Luca Pacioli
What led to the development of more advanced accounting systems?
The onset of the industrial revolution
What was the title of Luca Pacioli's work that described the system of double-entry bookkeeping?
Summa de Arithmetica, Geometria, Proportioni et Proportionalita
What was a result of the development of corporations?
Larger groups of investors and more complex structures of ownership
What is the basis of today's accounting systems?
The system of debits and credits in journals and ledgers
What is the main area of focus in the Companies Act No 07 of 2007?
Accounting records
According to the Companies Act, what is the obligation of the board of directors of a managing company of a fund?
To ensure that all listing requirements are met on a continuous basis
What is the Act that deals with the regulation of the insurance industry?
Regulation of the Insurance Industry Act, No. 43 of 2000
What are the contents and form of according to the Companies Act?
Financial statements and group financial statements
What is the Act that deals with the Finance Business?
Finance Business Act, No. 42 of 2011
What is the Section of the Companies Act that deals with auditors' access to information and attendance at AGM?
Section 154-165
What is the main purpose of accounting standards?
To determine the policies and practices of financial accounting
Which international body has Sri Lanka's accounting standards converged with?
International Accounting Standards Board (IASB)
What is the main function of the Sri Lanka Accounting and Auditing Standards Monitoring Board (SLAASMB)?
Monitoring the application of accounting standards
Which of the following companies is not a Specified Business Enterprise (SBE)?
Private companies with an annual turnover of LKR 1 million
What is the minimum annual turnover required for a non-listed company to be considered a Specified Business Enterprise (SBE)?
LKR 500 million
Which Act governs standard setting and monitoring of compliance in Sri Lanka?
Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995
Study Notes
Stakeholders/Users of Accounting Information
- Internal users: Management, Employees, and Internal Auditors
- External users: Investors, Government and regulatory authorities, Partners/ Owners, Lenders, Customers, Rating agencies, Financial analysts, and Academics
- Primary users: make decisions based on financial information
- Secondary users: have an indirect interest in the company
Branches of Accounting
- Financial Accounting
- Management Accounting
- Cost Accounting
- Auditing
- Tax Accounting
- Fund Accounting
- Government Accounting
- Forensic Accounting
- Fiduciary Accounting
- Sustainability Accounting
Scope of Financial Accounting and Reporting
- Provides information about financial position, performance, and changes in financial positions
- Focuses on authentic and clear information
- Follows authoritative pronouncements and regulatory rules
Definition of Accounting
- "The art of recording, classification and summarizing in a significant manner and in terms of money transactions and events which are, in part at least, of a financial character, and interpreting the results thereof." - AICPA
- "The process of identifying, measuring and communicating economic information to permit informed judgments and decisions by users of the information." - American Accounting Association
Accounting Activities
- Identifying economic transactions and events
- Recording events in a systematic and chronological diary
- Communicating information to interested users through accounting reports
History of Accounting
- Traced back to Mesopotamia thousands of years ago
- Developed alongside writing, counting, and money
- Luca Pacioli described the system of double-entry bookkeeping in 1494
Accounting in Decision Making
- Identifies, records, and communicates economic transactions and events
- Provides information for informed judgments and decisions
Sri Lankan Regulations
- Companies Act No. 07 of 2007
- Accounting and Auditing Standards Act No. 15 of 1995
- Finance Act No. 38 of 1971
- Inland Revenue Act No. 24 of 2017
- Employees' Provident Fund Act
Accounting Standards
- Provide standardized guiding principles for financial accounting
- Converged with International Accounting Standards Board (IASB) standards
- Governed by Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995
Explore the roots of accounting, from its ancient origins in Mesopotamia to its development alongside writing, counting, and money. Learn about the father of accounting, Luca Pacioli, and his contributions to the field.
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