Further aspects of financial accounting

Further Aspects of Financial Accounting

The Regulatory Framework

  • Understand the need for an international regulatory framework for financial reporting.
  • Learn about the IASB and its role in developing International Financial Reporting Standards (IFRS).
  • Recognise the principles behind following the ‘True and Fair’ view.
  • Be able to identify the key purposes of a Statement of Comprehensive Income and a Statement of Financial Position.
  • Recognise the importance of the UK GAAP alongside the IFRS.

Income Statement

  • Gain knowledge on how to generate an Income Statement and appropriate usage of different terms like revenue, cost of sales etc.
  • Understand the difference between gross profit, operating profit, profit before tax, and profit after tax.
  • Comprehend the significance of exceptional items and their placement in the income statement.
  • Learn how to account for dividends in both company’s financial statements and statement of changes in equity.

Statement of Financial Position

  • Gain knowledge on how to compile a Statement of Financial Position incorporating current and non-current assets and liabilities, equity etc.
  • Understand how concepts like capital, reserves and provisions are captured in the Statement of Financial Position.
  • Know the importance of Deferred Tax and how it is represented.

Understanding Ratios

  • Understand the calculation and interpretation of accounting ratios including profitability ratios, liquidity ratios and efficiency ratios.
  • Comprehend how these ratios can provide insights into an organisation’s performance, liquidity and investment attractiveness.
  • Learn how to interpret trend analysis to analyse financial statements over time.
  • Be able to perform inter-firm comparisons using ratio analysis.

Cash Flow Statements

  • Gain a thorough understanding of the Cash Flow Statement and its three sections: operating activities, investment activities and financing activities.
  • Be familiar with the direct and indirect method of cash flow statement presentation, and the circumstances in which each is used.
  • Recognise the cruciality of cash flow statements in assessing an organisation’s liquidity, solvency, and overall financial health.

Preparation of Consolidated Financial Statements

  • Understand the need for consolidated financial statements when dealing with groups of companies.
  • Learn how to prepare Consolidated Statement of Comprehensive Income and Consolidated Statement of Financial Position incorporating subsidiaries.
  • Understand the principles and processes of minority interest and goodwill calculations.
  • Comprehend treatment of inter-company transactions in consolidated financial statements.