What is classified as debt?
Debt is an amount of money borrowed by one party from another. A debt arrangement gives the borrowing party permission to borrow money under the condition that it is to be paid back at a later date, usually with interest.
Can a line of credit be long term debt?
A company has a variety of debt instruments it can utilize to raise capital. Credit lines, bank loans, and bonds with obligations and maturities greater than one year are some of the most common forms of long-term debt instruments used by companies.
What is ASC in finance?
The FASB Accounting Standards Codification (ASC) represents a major shift in the organization and presentation of U.S. generally accepted accounting principles (GAAP) and is a major restructuring of accounting and reporting standards designed to simplify user access to all authoritative GAAP by providing the …
What does ASC mean?
American Society of Cinematographers
What replaced ASC?
The FRSC’s main function is to establish generally accepted accounting principles in the Philippines. The FRSC is the successor of the Accounting Standards Council (ASC).
What are the major goals of the FASB ASC?
The FASB’s primary goal in developing the Codification is to simplify user access to all authoritative U.S. generally accepted accounting principles (GAAP) by providing all the authoritative literature related to a particular Topic in one place.
What is the difference between Pfrs and PAS?
Hence, the PFRS and the PAS are our current set of Generally Accepted Accounting Principles. The PAS corresponds to the adopted International Accounting Standards (IAS), while the PFRS corresponds to the adopted IFRS.
Is Pfrs same as IFRS?
IFRS Standards adopted as Philippines Financial Reporting Standards (PFRS) are required. Philippines has adopted the IFRS for SMEs Standard as the Philippines Financial Reporting Standard for SMEs (PFRS for SMEs).
What is Philippine standards on auditing?
The Philippine Standards on Auditing (PSA) deals with the auditor’s responsibility to form an opinion on the financial statements. It establishes the independent auditor’s overall responsibilities when conducting an audit of financial statements.
What is full disclosure?
Full disclosure is the U.S. Securities and Exchange Commission’s (SEC) requirement that publicly traded companies release and provide for the free exchange of all material facts that are relevant to their ongoing business operations.
What is the official accounting standard setting body in the Philippines?
Accounting standards in the Philippines are adopted by the Philippines Financial Reporting Standards Council (PFRSC) and approved by the Securities and Exchange Commission (SEC). The PFRSC has formed the Philippine Interpretations Committee (PIC), which issues implementation guidance on PFRSs.
What is the new accounting standard setting body?
International Accounting Standards (IAS) are older accounting standards issued by the International Accounting Standards Board (IASB), an independent international standard-setting body based in London. The IAS were replaced in 2001 by International Financial Reporting Standards (IFRS).
What constitutes GAAP in the Philippines?
The PFRS is a set of Generally Accepted Accounting Principles (GAAP) issued by the Accounting Standards Council (ASC) to govern the preparation of financial statements. These standards aim to promote fairness, transparency, and accuracy in financial reporting.
What are the standards of Pfrs?
Philippine Financial Reporting Standards
| Number | Title | Effective date |
|---|---|---|
| PFRS 13 | Fair Value Measurement | January 1, 2013 |
| PFRS 14 | Regulatory Deferral Accounts | January 1, 2016 |
| PFRS 15 | Revenue from Contracts with Customers | January 1, 2018 |
| PFRS 16 | Leases | January 1, 2019 |
What are qualitative characteristics?
Qualitative characteristics are the attributes that make financial information useful to users. Fundamental Characteristics distinguish useful financial reporting information from that is not useful or misleading. The two fundamental Qualitative characteristics are : Relevance. Faithful Representation.
What type of users needs is catered by general purpose financial statements?
Existing and potential investors, lenders, and other creditors are the primary users to whom general purpose financial reports are directed (OB5). They require useful information in order to be able to assess the future cash flows of the …
What are the objectives of Pfrs?
The very essence of using the IFRS/PFRS is to ensure consistency in recording, recognizing, measuring financial transactions, which if followed properly will ensure stability and transparency throughout the financial reporting process of the company.
What are the major challenges in the financial reporting environment?
What are the major challenges in Financial Reporting environment? The major challenges that can encounter in financial reporting environment are the IFRS/PRFS in a Political environment, the expectation gap, the financial reporting issues, the constraints on useful financial reporting.
What is the purpose of reporting comprehensive income?
The purpose of reporting comprehensive income is to report a measure of all changes in equity of an enterprise that result from recognized transactions and other economic events of the period other than transactions with owners in their capacity as owners.
What is the most useful information in predicting future cash flows?
Information about the financial effects of cash receipts and cash payments is generally considered the best indicator of ability to generate favorable cash flows.
What financial statements are required by GAAP?
GAAP requires the following four financial statements: Balance Sheet – statement of financial position at a given point in time. Income Statement – revenues minus expenses for a given time period ending at a specified date. Statement of Owner’s Equity – also known as Statement of Retained Earnings or Equity Statement.
Which term best describes information that influences the economic decision of users?
Which ONE of the following terms best describes information that influences the economic decisions of users? “Relevant” is the best answer. “Information is relevant if it has the ability to INFLUENCE THE ECONOMIC DECISIONS of users and is provided in time to influence those decisions. “
Is it possible for a company to be profitable yet not have enough cash to pay its bills?
It is possible for a company to be profitable, yet not have enough cash to pay its bills. If revenues are not growing faster than expenses, then net income will decrease. GAAP does not allow cash basis accounting to be used in external financial reports.
Is it bad for a company to have too much cash?
Excess cash has 3 negative impacts: It lowers your return on assets. It increases your cost of capital. It increases overall risk by destroying business value and can create an overly confident management team.
Why profit is not equivalent to cash?
Profits incorporate all business expenses, including depreciation. Depreciation doesn’t take cash out of your business; it’s an accounting concept that reduces the value of depreciable assets. So depreciation reduces profits, but not cash. Inventory and cost of goods sold also affect profits, but not necessarily cash.
Is negative cash flow good?
Having a negative cash flow from assets indicates that you’re putting more money into the long-term success of your company than you’re actually earning.
Is negative free cash flow a bad sign?
Free cash flow is actually the net cash that is left after paying off all the expenses. A company with negative cash flow doesn’t signify that it is bad because new companies usually spend a lot of cash. In some cases companies invest a lot in high rate of return projects which is a good sign for the investor.
What if net income is negative?
If the net income becomes negative, meaning there is a possibility that expenses are higher than sales or there are Expense transactions (or perhaps Journal Entries) either crediting an expense account or debiting it for a negative value. …
What if FCF is negative?
A company with negative free cash flow indicates an inability to generate enough cash to support the business. Free cash flow tracks the cash a company has left over after meeting its operating expenses.
Can you have negative cash flow and positive profit?
Key Takeaways: It is possible for a company to have positive cash flow while reporting negative net income. If net income is positive, the company is liquid. If a company has positive cash flow, it means the company’s liquid assets are increasing.