F1: Financial Reporting

Accrual accounting

The effects of a transaction are recognised in the period in which they occur, even if the payment occurs in a different period

Going concern

The company will continue in operation for the foreseeable future

Asset

A present economic resource controlled by the entity as a result of past events

Liabality

A present obligation to transfer economic resource as a result of past events

Equity

The residual interest in the assets of an entity after deducting all liabilities

Income

Increases in assets or decreases in liabilities that result in increases in equity

Working capital

The capital available to fund day to day operations, normally excess current assets over current liabilities

Working capital cycle

The period of time which elapses between the point when cash is first spent on producing a product, and when cash is collected from a purchaser

Overtrading

The condition of a business which enters into commitments in excess of their short term resources

PPE

Tangible assets that are held in use for the production or supply of goods or servicesF and are expected to be used in more than one period

Fair value

The price that would be received to sell an asset or paid to transfer a liability between market participants at the measurement date

Depreciation

The result of the systematic allocation of the depreciable amount of an asset over its useful life

Depreciable amount

The cost or revalued amount of an asset less its residual value

Lease

A contract that conveys the right to use an asset for a period of time in exchange for consideration

Lessee

An entity that obtains the right to use an asset for a period of time in exchange for consideration

Lessor

An entity that provides the right to use asset in exchange for consideration

Lease term

The non-cancellable period for which a lessee has the right to use an asset

Recoverable amount

The higher of an asset’s fair value less cost of disposal and its value in use

Fair value less costs of disposal

The net sales proceeds received from selling the asset in an orderly transaction (i.e. after transaction costs and legal fees)

Value in use

The present value for the future cash flows expected to be derived from the asset

Inventories

Assets that are held for sale, in the process of production for such sale, in the form of raw materials to be consumed in the production process

Net realisable value

The estimated selling price in the ordinary course of business, less estimated costs of completion and estimate costs required to make the sale (i.e. marketing, distribution costs)

Events after the reporting period

Events both favourable and unfavourable which occur between the end of the reporting period and the date whereby financial statements are authorised for issue

Cash

Comprises of cash on hand and demand deposits, less any bank overdraft

Cash equivalents

Short term highly liquid investments that are readily convertible to known amounts of cash

Cash flows

Inflows and outflows of cash and cash equivalents

Tax evasion

Occurs when a taxpayer seeks to pay too little tax by deliberately misleading the tax authorities

Tax avoidance

A way of arranging your afairs to take advantage of tax rules to minimise the level of tax that is payable

Direct taxation

Charged directly on the person or entity intended to pay the tax and is a tax on income. Paid directly to tax authorities

Indirect taxation

Charged indirectly on the final consumer of the goods or services and is a tax on consumption/spending

Taxable person

The person liable to pay the tax

Tax gap

The gap between the tax theoretically collectable and the amount actually collected

Conservative policy (working capital)

All permanent assets (current and non-current) and some fluctuating assets are financed by long-term funding

Aggressive policy (working capital)

All fluctuating and part of the permanent current assets are financed by short-term funding

Moderate policy (working capital)

Short-term funding is used to finance the fluctuating current assets and the permanent assets are financed by long-term funding

Factoring

An arrangement to have debts collected by a factor company which advances a proportion of the money it is due to collect

Invoice discounting

The sale of debts to a third party at a discount in return for prompt cash

Economic order quantity

The most economic inventory replenishment inventory order size, which minimises the sum of inventory ordering costs and inventory holding costs

IAS 1

Presentation of financial statements

IAS 2

Inventories

IAS 10

Events after the reporting period

IFRS 16

Lease accounting

IFRS 5

Non-current assets held for sale and discontinued operations

IAS 16

PPE

IAS 36

Disclosure