1 / 9

2.4 – Accounting Standards (formerly known as GAAPs)

2.4 – Accounting Standards (formerly known as GAAPs). Guidelines established by the Accounting Standards Board (AcSB) a governing body established by the Canadian Institute of Chartered Accountants (CICA).

sonja
Download Presentation

2.4 – Accounting Standards (formerly known as GAAPs)

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. 2.4 – Accounting Standards (formerly known as GAAPs) Guidelines established by the Accounting Standards Board (AcSB) a governing body established by the Canadian Institute of Chartered Accountants (CICA). • The AcSB consults the International Accounting Standards Board (IASB) who develop the International Financial Reporting Standards (IFRS) to establish accounting regulations for Cdn companies

  2. IFRS – International Financial Reporting Standards • All publicly traded companies must now follow International Financial Reporting Standards (IFRS) • This allows international companies to have consistent financial reporting.

  3. ASPE – Accounting Standards for Private Enterprises • Private businesses that are not listed on the stock exchange must follow these guidelines • Or they can choose to implement IFRS • There are not a lot of differences between APSE & IFRS • In this course we will focus on ASPE reporting

  4. Purpose of Accounting Standards • To ensure that financial statements are consistent • To make it easier for users (like you) to read the statements and understand what is happening in the company. • To allow you to compare 2 different companies if you know that they have followed the same standards.

  5. A few Accounting Standards: • Business Entity Concept • Only those items related to the business can be included on the company’s balance sheet. Ex. The car the owner drives to work belongs to the owner; therefore, does not belong on the balance sheet.

  6. A few Accounting Standards • The Continuing Concern Concept • Assumes that a business will continue to operate unless it is known that it will not. • Ex. If a company had a bunch of business cards and stationary with the company name printed on it and it cost $500 (value on B/S) but the company was not going to exist past the December than this asset isn’t really worth $500. • *sometimes referred to as the Going Concern Concept

  7. A few Accounting Standards • Cost Principle - APSE • Requires accountants to record the value of assets at their historical cost price. • Ex. Land was purchased 20 years ago for $40,000. Today the market value of the land is $180,000. The accountant must list the land on the balance sheet at $40,000.

  8. A few Accounting Standards • The Revaluation Model (IFRS) • This allows for modification of the cost principle. • Allows accountants to change the value of a particular asset based on market conditions • Ex. A custom sports car was purchased for $21,850 and the market value has risen to $30,000, the business could increase the value of the asset.

  9. IFRS & Balance Sheet Format • Currently on the right-hand side of the balance sheet, the liabilities are listed first and the equity second. • If a company has moved to IFRS, than the Balance Sheet could be rearranged to list equity first and the long-term liabilities second and then the current liabilities. • Instead of Balance Sheet, it is now called Statement of Financial Position.

More Related