Fundamentals of Accounting and Malaysian Financial Reporting Frameworks

Flashcards covering introductory accounting concepts, bookkeeping, Malaysian regulatory framework and standards, components of financial statements, and types of businesses based on lecture material.

Accounting

A systematic process of identifying, recording, measuring, classifying, verifying, summarizing, interpreting and communicating financial information.

Luca Pacioli

The Father of Accounting who produced the first published work on double entry bookkeeping in 1494.

Malaysian Institute of Accountants (MIA)

The professional body that regulates the accountancy profession in Malaysia and enforces ethics and continuing professional education.

Malaysian Accounting Standards Board (MASB)

An independent authority established under the Financial Reporting Act 1997 that sets and issues accounting standards in Malaysia.

Generally Accepted Accounting Principles (GAAP)

A common framework of country-specific accounting rules used to prepare, present, and report financial statements to ensure consistency, transparency, and comparability.

Malaysian Financial Reporting Standards (MFRS)

Accounting standards issued by MASB based on International Financial Reporting Standards (IFRS), mandatory for public listed companies on Bursa Malaysia and entities with public accountability.

Malaysian Private Entities Reporting Standard (MPERS)

Accounting standards based on the IFRS for SMEs, applicable to private entities in Malaysia that are not publicly accountable.

Financial Reporting Act 1997

The legislation under which the Malaysian Accounting Standards Board (MASB) was established.

Companies Act 2016

The main legal framework for corporate governance and financial reporting in Malaysia, requiring mandatory preparation of approved financial statements under Part III.

Suruhanjaya Syarikat Malaysia (SSM)

Also known as Companies Commission of Malaysia, it regulates companies and business registration, enforces compliance with Companies Act 2016, and requires timely filing of audited financial statements.

Audit Oversight Board (AOB)

An entity operating under the Securities Commission Malaysia that regulates auditors of public-interest entities (PIEs) to ensure audit quality.

Income Tax Act 1967

The legislation overseen by Lembaga Hasil Dalam Negeri (LHDN) that requires financial statements to align with tax reporting requirements and proper record keeping.

Bookkeeping

The mechanical aspects of accounting such as recording, classifying, and summarising transactions, which form a part of accounting.

Classifying

The accounting activity involving sorting out the mass of accounting data into orderly and meaningful categories or classifications.

Recording

The activity where transactions are first recorded in the books of the business.

Summarising

The activity where accounting data are periodically summarised.

Interpreting

The activity where financial data are analysed and used to assist in more effective decision-making.

Statement of Profit or Loss (SOPL)

A component of financial statements showing the company's financial performance in terms of net profit or loss over a specified period, composed of income and expense.

Statement of Financial Position (SOFP)

A component of financial statements, also known as the balance sheet, that presents the financial position of an entity at a given date comprising assets, liabilities, and equity.

Income

What the business has earned over a period, such as sales revenue or dividend income.

Expense

The cost incurred by the business over a period, such as salaries and wages, depreciation, or rental charges.

Assets

Something a business owns or controls, such as cash, inventory, plant, and machinery.

Liabilities

Something a business owes to someone, such as payables or bank loans.

Equity

What the business owes to its owners, representing the amount of capital remaining after assets are used to pay off outstanding liabilities.

Cash Flow Statement

A component of financial statements that presents the movement in cash and bank balances over a period from investment, operations, or financing activities.

Statement of Changes in Equity (SOCE)

Also known as the Statement of Retained Earnings, this component details the movement in owners' equity over a period.

Financial Accounting

A branch of accounting concerned with providing financial position and performance information to external users.

Management Accounting

A branch of accounting that provides accounting information to internal users for making decisions.

Sole Proprietorship

A business where one person owns the stock of trade or conducts manufacturing for his/her own profits.

Partnership

An association of two or more individuals (partners) who carry on as co-owners a business for profit.

Company / Corporation

A business usually having many owners, created by law as a separate legal entity with continuous existence and full rights/responsibilities of a person.