The document discusses key concepts from Chapter 1 of the Framework for Preparation and Presentation of Financial Statements. It outlines the framework, users of financial statements, fundamental accounting assumptions, qualitative characteristics of financial statements, elements of financial statements including assets, liabilities, equity, income and expenses, measurement of elements, and the concept of capital maintenance.
The document discusses key concepts from Chapter 1 of the Framework for Preparation and Presentation of Financial Statements. It outlines the framework, users of financial statements, fundamental accounting assumptions, qualitative characteristics of financial statements, elements of financial statements including assets, liabilities, equity, income and expenses, measurement of elements, and the concept of capital maintenance.
The document discusses key concepts from Chapter 1 of the Framework for Preparation and Presentation of Financial Statements. It outlines the framework, users of financial statements, fundamental accounting assumptions, qualitative characteristics of financial statements, elements of financial statements including assets, liabilities, equity, income and expenses, measurement of elements, and the concept of capital maintenance.
The document discusses key concepts from Chapter 1 of the Framework for Preparation and Presentation of Financial Statements. It outlines the framework, users of financial statements, fundamental accounting assumptions, qualitative characteristics of financial statements, elements of financial statements including assets, liabilities, equity, income and expenses, measurement of elements, and the concept of capital maintenance.
PRACTICE 100 IMPORTANT QUESTIONS Conceptual Notes QUESTIONS CHAPTER 2 Chapter 1: Framework for Preparation and Presentation of Financial Statements
1. Framework: - Framework provides a road map and approach which will be considered as a broad line within which all IND AS will be applied. Note: - IND AS will prevail over this framework. 2. Users of financial statements – Investors: Employees: Lenders: Suppliers and other trade creditors: Customers: Governments and their agencies: Public: 3. Fundamental accounting assumption Going concern Consistency Accrual 4. Qualitative characteristics of FS Understand ability Relevance Materiality Reliability Faithful representation of all the information Substance over form Neutral – Free from over from personal bias Prudence Completeness
CAtestseries.org Page 1 Comparability 5. Elements of FS Assets: An asset is a resource controlled by the entity as a result of past events and From which future economic benefits are expected to flow to the entity. Liability: A liability is present obligation of the entity arising from past events, The settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits. Equity: Equity is the residual interest in the assets of the entity after deducting all its liabilities. Income: Income is increase in economic benefits during the accounting period in the form of inflows or enhancement of assets or decreases of liabilities that result in increases in equity Other than those relating to contributions from equity participants. Expense: Expense is defined as decrease in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrence of liabilities that result in decrease in equity Other than those relating to distributions to equity participants. 6. Measurement of elements Historical cost Current Cost (Replacement Cost) Realisable value (Settlement)
CAtestseries.org Page 2 Present value 7. Concept of capital: There are two ways of maintaining Capital: Financial capital maintenance Physical capital maintenance Financial capital maintenance: - Financial profit will be calculated as under- Closing capital Including Reserves & Surplus XXX (Net asset as on the closing date) Less: - Initial capital Contribution (Including Premium) XXX Less: - Additional capital Contribution (Including Premium) XXX Financial profit XXX Physical capital maintenance –Physical profit will be calculated as under- Closing capital Including Reserves & Surplus XXX Less: Indexed Capital (Initial + Additional Capital including premium) XXX Physical profit XXX
"The Language of Business: How Accounting Tells Your Story" "A Comprehensive Guide to Understanding, Interpreting, and Leveraging Financial Statements for Personal and Professional Success"
"The Language of Business: How Accounting Tells Your Story" "A Comprehensive Guide to Understanding, Interpreting, and Leveraging Financial Statements for Personal and Professional Success"
