Accc

Accounting and Business
ACC1002 August 14th, 2013

REQUIRED READING: TEXTBOOK CHAPTER 1

The textbook Chapter 1 is fully examinable. The lecture material is also fully examinable.

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Who needs Accounting?
Financial Accounting  Share Investors  Lenders  Employees  Government Managerial Accounting  Management

Financial Accounting Standards
 In Singapore, companies must follow the Singapore Financial Reporting Standards (FRS)
 All companies incorporated in Singapore

 The FRS are set by the ASC
 Accounting Standards Council

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FRS and IFRS
 Singapore FRS are based on International Financial Reporting Standards (IFRS)
 FRS 1 corresponds to IAS 1  FRS 101 corresponds to IFRS 1

IFRS around the world

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Conceptual Framework
 Starting point for the FRS  Defines basic accounting concepts (asset, liability, …)  Gives guidelines for good accounting (Qualitative Characteristics)

Fundamental Qualitative Characteristics
 Relevance
 Gives numbers that users need for decisions

 Faithful Representation
 Provides a true and fair view

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Enhancing Qualitative Characteristics
 Comparability
 Can compare company X to company Y, or company X this year to company X last year

Enhancing Qualitative Characteristics (contd.)
 Timeliness
 The information is not stale or out of date

 Verifiability
 Can check if the numbers are correct

 Understandability
 Users can understand the information

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Think, Pair, Share
Warren Buffett, the famous investor, spends several hours studying the financial statements of companies before he buys their shares. What qualitative characteristic must be present for this strategy to work?

Think, pair, share
Listed companies in