Preview

Nature and Regulation of Companies and Their Operations

Good Essays
Open Document
Open Document
1116 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Nature and Regulation of Companies and Their Operations
Week 1 - Nature & Regulation of Companies & Company Operations Legal nature of company  Separate legal identity, distinct from owners  Companies act through ‘agents’. eg. shareholders elect board of directors to act on their behalf Public Company (Ltd.)  Limited liability of owners • Raises funds from public Types of companies Private Company (Pty. Ltd.)
• • • • • • • • •

Regulation of companies Corporations Law: Companies must keep proper accounting records; prepare yearly & half-yearly FS; ensure FS comply with accting standards. Accounting Standards: Australian Accounting Standards Board (AASB) is responsible for issuing accounting standards which have backing of the Corporations Law. Australian Stock Exchange – listing rules require companies disclose certain info.s which are necessary to fully inform stock market. Australian Securities & Investment Commission (ASIC): administers Corporations Law including compliance with Accounting Standards International Accting Standards Board (IASB): attempts to converge/harmonise acting standards throughout the world. Reasons for regulating financial reporting Reasons for preparing FS: Provides info. that is useful for making economic decisions to resource providers (eg. shareholders, lenders, employees), recipients of G&S (eg. customers, taxpayers), oversight groups (eg. regulatory agencies, media, unions). Characteristics of useful accting info.: relevance (predictive, feedback, timely), faithful representation (verifiable, Gloria Ltd reliable, free from bias), comparability & consistency, materiality. Relationship between FSs Revaluation of video library by $1500: DR Video Library Cr Revaluation surplus Revaluation of library is shown in other comprehensive income
Gloria Ltd Statement of income and other comprehensive income For period ended 31 January 2012 Income Rental revenue 10600 Expenses (classified by function) Selling expenses -advertising 200 Administrative expenses -telephone 195 -electricity 185
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Satisfactory Essays

    Acc222 Unit 2 Assignment
    • 539 Words
    • 3 Pages

    Acc222 Unit 2 Assignment

    In view of the large number of entities lodging special purpose financial statements with ASIC, the AASB are of the view that the reporting entity concept in SAC 1 Definition of the Reporting Entity has not been applied correctly. The future At their April 2013 meeting, the AASB discussed the future role of the reporting entity concept. There was general agreement that: They (AASB) would use the reporting entity concept as a basis for their own deliberations in setting general purpose financial reporting requirements Other regulators could use the reporting entity concept to identify entities that should be required to prepare and lodge general purpose financial statements They would change their application focus of Australian Accounting Standards from the reporting entity concept to that of general purpose financial statements. There was also general agreement amongst the board members that: The AASB’s mandate is to set accounting standards for preparing general purpose financial statements under Tier 1 or Tier 2, and Setting requirements for special purpose financial statements is a matter to be agreed between…

    • 539 Words
    • 3 Pages
    Satisfactory Essays
    Read More
  • Powerful Essays

    Rsm220-Week 01 Slides
    • 2259 Words
    • 10 Pages

    Rsm220-Week 01 Slides

    Role of Financial Reporting • Financial statements and financial reporting • Accounting and capital allocation •Stakeholders Objective of Financial Reporting •Management bias •Users’ needs Standard Setting • Need to develop standards • Parties involved in standard setting • Standard setting in a political environment GAAP • GAAP hierarchy •Professional judgement • Role of ethics Challenges Facing Financial Reporting • Globalization of companies and capital markets • Impact of technology • Changing nature of the economy • Increased requirement for accountability…

    • 2259 Words
    • 10 Pages
    Powerful Essays
    Read More
  • Satisfactory Essays

    Fasb Convergence
    • 388 Words
    • 2 Pages

    Fasb Convergence

    “The FASB’s mission is to establish and improve standards of financial accounting and reporting for the guidance and education of the public, including issuers, auditors, and users of financial information”(Schroeder et al., 2011, p. 9). The International Accounting Standards Board (IASB) which is an independent private sector body; was formed in 1973 for the purpose of simplifying the process of international business’s financial reporting and to harmonize and coordinate the countries engaged in setting accounting standards. “The goal of the FASB’s Short term International Convergence Project is to remove a variety of individual differences between U.S. GAAP and the International Financial Reporting Standards (IFRS) that are not within the scope of other major projects”(Schroeder et al., 2011, p.…

    • 388 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Best Essays

    Accounting Standard Board Paper 3
    • 1444 Words
    • 6 Pages

    Accounting Standard Board Paper 3

    The Financial Accounting Standards Board (FASB) began operations in 1973 and has been the designated organization in the private sector for establishing standards of financial accounting. Those standards govern the preparation of financial statements. They are officially recognized as authoritative by the Securities and Exchange Commission (SEC) and the American Institute of Certified Public Accountants (AICPA). Such standards are important to the efficient functioning of the economy because investors, creditors, auditors, and others rely on credible, transparent, and comparable financial information. The mission of the FASB is to establish and improve standards of financial accounting and reporting for the guidance and education of the public, including issuers, auditors, and users of financial information (Financial Accounting Standards Board, n.d.).…

    • 1444 Words
    • 6 Pages
    Best Essays
    Read More
  • Better Essays

    Relationship Between the Ifrs and the Fasb
    • 1230 Words
    • 5 Pages

    Relationship Between the Ifrs and the Fasb

    The principle of accounting dates backs thousands of years to a time where those in positions of governance wanted to make others aware of their growth and progress. Shift forward, and now the principles of accounting have moved towards an interest in investments and creating wealth for all those who hold stock within the company. This has led to the creation of standards and guidelines by which these accounting principles adhere to, producing financial statements which follow the four qualitative characteristics (reliable, relevant, comparable, and understandable). The Financial Accounting Standards Board (FASB), under the guidance of the Securities Exchange Commission (SEC) established the GAAP which governs US companies with their application of accounting principles to the presentation of their financial statements. The IASB has created the IFRS which serves the same purpose but for the global financial community. A convergence of these two entities began in 2002 with the IASB and FASB coordinating together to produce accounting standards in a world where accounting standards are often amended. With ever-increasing changes in the realm of accounting it becomes important to for those in the profession of accounting to be aware of these changes and the impact they have on the reporting of a company’s financial outlook. The Masters of Accountancy program is designed to provide a comprehensive background of the creation of the FASB and the IASB, the relationship between their accounting standards, and how their standards measure up to one another.…

    • 1230 Words
    • 5 Pages
    Better Essays
    Read More
  • Powerful Essays

    Accounting Standards Boards Paper 4
    • 1448 Words
    • 42 Pages

    Accounting Standards Boards Paper 4

    Accounting was created thousand years ago. Many companies use accounting system to record, maintain and report, and analyze business financial transactions. Because managers and investors make their business decisions based on Financial Statement, information obtained from Financial Statement must be concise and reliable. Budgets and performance reports provide decision support, planning and control business operations; therefore, Financial Statements must be accurately to represent a true and fair view of companies. To evaluate results of information from Financial Statement, accounting report must be related to the accounting standard principles which, currently, several organizations have established to comply with. Among all, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are the most influential standard-setters in accounting report systems. This paper will provide a brief history of each organizations and their interrelationship, in which IASB is equivalent to the original pronouncement of FASB. Furthermore, this paper will explain the benefit of Master of Science in Accounting (MSA) program and how it guides students to future professional career in accounting vocation. History of FASB…

    • 1448 Words
    • 42 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    Adoption of Ifrs in Australia - Essay
    • 1939 Words
    • 8 Pages

    Adoption of Ifrs in Australia - Essay

    It was the latter of these two points which was the deciding factor for the future of Australian accounting standards. Investors from around the world were craving a single set of accounting standards, making it easy to study the financial reports of companies where they wish to invest their money, from all over the world. As well as this, the information in these reports should be relevant, reliable, and understandable.…

    • 1939 Words
    • 8 Pages
    Powerful Essays
    Read More
  • Good Essays

    Presentation of Comprehensive Income
    • 1215 Words
    • 5 Pages

    Presentation of Comprehensive Income

    The Accounting Standards Update (ASU) 2011-05, Comprehensive Income: Presentation of Comprehensive Income was issued to increase the importance of items reported in other comprehensive income. The FASB, along with IASB, worked jointly to improve and converge the reporting and presentation requirements for items contained in other comprehensive income. At the same time FASB issued ASU 2011-05, IASB issued an amendment to IAS 1, Presentation of Financial Statements, which implemented the same reporting and presentation requirements as FASB’s new standard (ASU 2011-05). As a result, the new standard has achieved increased comparability between entities reporting under US GAAP and those under IFRS; however the standard has received just criticism in reference to a particular requirement as well.…

    • 1215 Words
    • 5 Pages
    Good Essays
    Read More
  • Good Essays

    Mid-Term Review: Accounting Information Systems
    • 1479 Words
    • 6 Pages

    Mid-Term Review: Accounting Information Systems

    Mid-term Review Accounting Information Systems XP Chapter 1: Accounting Information Systems and Accountant Midterm Review - Accounting Information Systems 2 Question 1 XP • Which of the following is not a means by which information improves decision making? A. Increasing information overload B. Reducing uncertainty C. Providing feedback about the effectiveness of prior decisions. D. Identifying situations requiring management action Midterm Review - Accounting Information Systems 3 Question 2 XP • The Financial Accounting Standards Board (FASB), in its Statement of Financial Accounting Concepts No. 2, has defined accounting as A. An information identification, development, measurement, and communication process. B. A way to provide adequate controls to safeguard an organization's assets…

    • 1479 Words
    • 6 Pages
    Good Essays
    Read More
  • Powerful Essays

    The Accounting Standard in New Zealand
    • 1209 Words
    • 5 Pages

    The Accounting Standard in New Zealand

    IAS Plus: Deloitte. (2011). Summary of preface to International Financial reporting Standards. Retrieved from http://www.iasplus.com/standard/preface.htm…

    • 1209 Words
    • 5 Pages
    Powerful Essays
    Read More
  • Better Essays

    accounting final
    • 847 Words
    • 3 Pages

    accounting final

    “Basic accounting and reporting issues related to recognition and measurement of receivables, allowance accounts, recording discounts, the allowance method to account for bad debt and factoring are basically the same between IFRS and GAAP. However, the FASB (Financial Accounting Standards Board) and IASB (International Accounting Standards Board) are taking steps by working to implement fair value measurement, the amount they currently could be sold for, for financial instruments. “The FASB and IASB are facing opposition from various factors thus have adopted a piecemeal approach. Step one is to disclose the fair value information in the notes, and second step is the fair market option which permits companies to record some type of financial instrument at fair value in financial statements”(Kimmel, P. D., 2013). “While both the FASB and IASB believe that financial statements would be more transparent and understandable if companies recorded and reported all financial instruments at fair value. Critics say that this FASB and IASB split model, some financial instruments are reported at fair value, and some reported assets can be amortized cost, can result in making a company look like two companies. The illusion of two companies is created due to the identical securities accounting of those securities in different ways”(Kimmel, P. D., 2013).…

    • 847 Words
    • 3 Pages
    Better Essays
    Read More
  • Powerful Essays

    Financial Accounting Corporate Report 1975
    • 1576 Words
    • 7 Pages

    Financial Accounting Corporate Report 1975

    In 1975 the Corporate Report was published, this was the outcome from the Accounting Standards Steering Committee's wide ranging discussion paper and in part considered the usefulness of financial statements…

    • 1576 Words
    • 7 Pages
    Powerful Essays
    Read More
  • Satisfactory Essays

    Differences Between Ifrs & a-Ifrs
    • 591 Words
    • 3 Pages

    Differences Between Ifrs & a-Ifrs

    Corporations in Australia have started adopting IFRS as its domestic financial reporting standards since 2005. Although AIFRS applied almost whole contents and wording of IFRS, owing to the different domestic legislative environment, some modifications were needed and included the removal of certain options permitted or wording changes under IFRS. The species of these differences that exist between IFRS and AIFRS can be universally sorted as follow:…

    • 591 Words
    • 3 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    Accounting Regulatory Bodies 13
    • 720 Words
    • 3 Pages

    Accounting Regulatory Bodies 13

    The success of an organization relies heavily on accounting. Investors are extremely important to publicly traded companies, and they rely on accurate accounting documents when choosing whether or not they want to invest in a company. Several accounting regulatory bodies exist, and each of them plays an important role in accounting and the effects that accounting has on an organization. The primary goal of these regulatory bodies is to establish a set of rules and regulations and help improve the financial accounting standards of organizations. A few of such bodies are the Securities and Exchange Commission, the Financial Accounting Standards Board, the Government Accounting Standards Board, and the International Accounting Standards Board.…

    • 720 Words
    • 3 Pages
    Good Essays
    Read More
  • Good Essays

    Case Study Of Naa Gee Pty Ltd.
    • 795 Words
    • 4 Pages

    Case Study Of Naa Gee Pty Ltd.

    The general purpose financial reports can also be a mean that the management and governing bodies use to discharge their accountability to those users. To meet the purpose of the Accounting Concepts and Accounting Standards about adequate disclosure of information to users of the general purpose financial report, it is important that the entities that should report are required to report. Additionally to make sure that the general purpose financial reports are developed rationally and efficiently, it is also important that entities that do not need to report are not required to…

    • 795 Words
    • 4 Pages
    Good Essays
    Read More

Related Topics