This text provides a detailed approach to financial accounting for advanced readers. The basics like the double-bookkeeping method according to the IFRS should be clear and are extended to topics like equity (diverse classes of shares), debt (primary bonds) and investments (FVTPL, FVOCI, etc.). All these accounting rules are stated and supported by several figures, graphics, and pictures.
Recommended for every middle-class company with a finance department or planning an expansion. Also, underlying concepts of different market (movements) are stated and linked to the related IAS principles. Even though the IFRS is the international standard, the German GAAP or the US GAAP are slightly deviating from it, but due to the progressing globalization, the IFRS approach is more and more accepted within the EU and soon even in Germany. But even now this text provides with enough information about the underlying structure and makes it much easier to understand the German or US methods.
Table of Contents
Where to get information
Who is interested in those information
Second Lecture: Shareholders Equity
Third Lecture: Liabilities
Lecture Four: Short-term Liabilities
Lecture Five: Short-term liabilities
Sixth Lecture: Internal control: Detecting and avoiding fraud
Research Objective and Key Themes
This work provides a comprehensive analysis of financial accounting principles tailored for advanced readers, bridging the gap between theoretical IFRS frameworks and practical application in corporate environments. The text aims to deepen the understanding of equity, debt, and investment accounting, while equipping readers with the knowledge to evaluate financial statements critically and implement effective internal control systems to mitigate fraud.
- Principles of financial accounting including equity management and liability accounting.
- Advanced investment categories and consolidation methods under IFRS.
- Strategic use of annual reports and financial statements for stakeholder decision-making.
- Risk assessment, debt covenants, and credit rating processes.
- Mechanisms for internal control and fraud detection in corporate financial environments.
Excerpt from the Book
Third Lecture: Liabilities.
Overview of liabilities. Recognized on the balance sheet, but only if it can be measured reliably. Long-term liabilities have to be accounted at present value (discounted). Short-term liabilities can be listed under nominal amounts.
Bond – a very common long-term liability. Issued because of raising money, lending from one bank needs very high information obligations which aren't wanted. Hand out several bonds with a small principal to receive the high amount of money which is needed. Bond certificate includes entity name, principal, maturity date, interest rate, and interest payment dates.
Par value / face value / maturity value: Principal which is given back at maturity. Interest payment dates are normally settled annually or semi-annually.
Issuance of bonds by underwriters. The underwriter tries to convince a bank (or other financial institution) to sell these bonds. The underwriter can sell bonds to clients and earns a sales commission.
Summary of Chapters
Where to get information: Examines sources of financial data and the critical importance of evaluating information reliability through audits and analyst ratings.
Who is interested in those information: Details the various stakeholder groups, such as shareholders, creditors, and managers, and their specific interests in a company's financial performance.
Second Lecture: Shareholders Equity: Explains the structure of corporate equity, the rights of shareholders, and the implications of share issuance and treasury stock.
Third Lecture: Liabilities: Covers long-term debt instruments like bonds, their issuance, and the significance of credit ratings in financial planning.
Lecture Four: Short-term Liabilities: Discusses lease accounting and the strategic advantages and risks associated with different financing operations.
Lecture Five: Short-term liabilities: Focuses on operational liabilities such as accounts payable, provisions, and contingent liabilities within the IFRS framework.
Sixth Lecture: Internal control: Detecting and avoiding fraud: Outlines the fraud triangle and defines robust internal control objectives and practices to prevent financial misconduct.
Keywords
Financial Statements, IFRS, Shareholders Equity, Liabilities, Bonds, Capital Lease, Investment Accounting, Consolidation, Internal Control, Fraud Detection, Sarbanes Oxley Act, Credit Rating, Asset Management, Annual Report, Audit
Frequently Asked Questions
What is the core focus of this publication?
The text provides a detailed approach to financial accounting for advanced readers, covering the transition from basic bookkeeping to complex topics like IFRS-compliant equity and debt management.
Which specific areas of accounting are covered?
It covers equity, primary bonds, various investment categories (FVTPL, FVOCI), short-term and long-term liabilities, as well as consolidation and internal control systems.
What is the primary goal of the author?
The goal is to explain the underlying structure of financial accounting to make both German and US methods easier to understand for finance departments and companies planning expansion.
Which scientific or regulatory framework is used?
The book primarily focuses on International Financial Reporting Standards (IFRS) as the international standard while acknowledging deviations in German and US GAAP.
What is addressed in the main body of the work?
The main body treats specific accounting lectures including shareholder equity, long-term and short-term liabilities, investment categories, and internal control mechanisms for fraud prevention.
Which keywords best characterize this work?
Key terms include IFRS, Financial Statements, Internal Control, Fraud Detection, Debt Accounting, and Equity Management.
How does the book explain the difference between asset deals and share deals?
It distinguishes them by the legal and procedural implications: asset deals involve acquiring specific lucrative parts, whereas share deals create a parent-subsidiary dependency involving the acquisition of all underlying liabilities.
What is the significance of the "Fraud Triangle" mentioned in the text?
The Fraud Triangle highlights three critical factors—Motive, Opportunity, and Rationalization—that are essential for understanding how and why financial fraud occurs in a corporate setting.
How does the text suggest companies should handle foreign-currency risks?
It suggests ordering contract partners to pay in the company's local currency or utilizing financial hedges like futures to mitigate exchange rate volatility.
- Quote paper
- Mike G. (Author), 2017, Guideline for Financial Statements, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/366935
