BUSN1001: Business Reporting and Analysis - Lecture 1

This flashcard set covers the fundamental concepts of introductory accounting from Lecture 1, including terminology, regulatory bodies in Australia, the Conceptual Framework, and modern reporting practices like sustainability and integrated reporting.

Accounting

The process of identifying, measuring and communicating economic information about an entity to a variety of users for decision making purposes.

Transactions

Exchanges of something of value between $2$ or more entities that can be reliably measured and recorded.

Internal Users

Managers within an entity who use accounting information for decision making.

External Users (Stakeholders)

Parties outside the entity, such as shareholders, banks, suppliers, and government authorities, who use information to make decisions about the entity.

General Purpose Financial Statements

A set of statements directed towards the common information needs of a wide range of users, including the income statement, balance sheet, statement of cash flows, and statement of changes in equity.

Financial Accounting

The preparation and presentation of general purpose financial statements bound by GAAP to allow various users to make economic decisions about the entity.

Management Accounting

The provision of economic information for internal users about planning, decision making for future events, formulating budgets, and monitoring control.

GAAP (Generally Accepted Accounting Principles)

Accounting standards (including AASB and IASB), the Corporations Act, and relevant rules of accounting associations and organizations like the ASX.

ASIC (Australian Securities and Investments Commission)

The company watchdog that enforces company and financial services laws, including the Corporations Act $2001$, to protect consumers, investors, and creditors.

ASX (Australian Stock Exchange)

The main Australian market place for trading equities and government bonds; it regulates companies through Operating and Listing Rules.

AASB (Australian Accounting Standards Board)

The body responsible for issuing Australian versions of International Accounting Standards and influencing the development of IFRS.

IFRS (International Financial Reporting Standards)

Standards prepared and issued by the IASB; AASB standards have complied with these since $1$ Jan $2005$.

Financial Reporting Council (FRC)

The body that oversees the accounting and auditing standard-setting process for both public and private sectors and monitors the AASB.

Conceptual Framework

The foundation on which accounting standards are developed, setting the objectives of financial reports and prescribing qualitative characteristics.

Relevance

A fundamental qualitative characteristic where information helps predict future outcomes and confirm earlier predictions.

Faithful Representation

A fundamental qualitative characteristic where information faithfully represents the phenomena it purports to represent.

Comparability

An enhancing qualitative characteristic allowing users to compare aspects of the entity over time and between different entities.

Asset

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 present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow of resources embodying economic benefits.

Equity

The residual interest in the assets of the entity after deducting its liabilities.

Income

Increases in economic benefits during the accounting period in the form of inflows, enhancements of assets, or decreases of liabilities that result in increases in equity, excluding contributions from equity participants.

Expenses

Decreases in economic benefits during the accounting period in the form of outflows, depletions of assets, or incurrences of liabilities that result in decreases in equity, excluding distributions to equity participants.

Business Sustainability

Considering the long-term impact of business decisions on the protection of the environment and people, involving the three pillars: economic, environmental, and social dimensions.

Integrated Reporting

A combination of social, environmental, financial, and governance information that represents how an organization creates and sustains value using six types of capitals.

The Six Capitals of Integrated Reporting

Financial capital, manufactured capital, human capital, intellectual capital, natural capital, and social and relationship capital.