BackIntroduction to Company Financial Statements - Financial Accounting
09:57
Terms in this set (24)
IFRS is a set of international accounting standards that specify how transactions and events should be recognized, measured, and reported in annual financial statements.
To provide a global framework for public companies to prepare and disclose annual financial statements with transparency and comparability.
A company is a legal entity incorporated under the Companies Act, existing independently from its shareholders, aiming to make a profit.
Shares divide company capital into units, allowing multiple shareholders to invest and share profits proportionally.
Non-profit, profit (state-owned, private, personal liability, public) companies as defined by the Companies Act 71 of 2008.
The MOI is the key document governing a company, outlining rules and protecting shareholders' interests in line with the Companies Act.
Full IFRS applies to entities with public accountability; IFRS for SMEs is a simplified standard for entities without public accountability.
Entities with publicly traded debt or equity, or holding assets in a fiduciary capacity for a broad group of outsiders.
Generally Recognized Accounting Practice, a set of accounting standards for South African public sector entities to ensure transparency and consistency.
To provide information about an entity's financial position, performance, and cash flows useful for decision-making by various users.
Shareholders, investors, management, creditors, tax authorities, bankers, suppliers, and employees.
Statements must be accurate, complete, and comply with IFRS or IFRS for SMEs, reflecting the company's financial state fairly.
A score based on employees, liabilities, turnover, and beneficial shareholders used to determine applicable financial reporting standards and audit requirements.
No new par value shares may be issued; shares must be issued for adequate consideration determined by the board.
Shares issued under approved employee share schemes do not require special shareholder resolution.
Ordinary resolutions require >50% votes; special resolutions require ≥75%, but MOI can set different thresholds.
Distributions to shareholders, including dividends, must pass the solvency and liquidity test as per Companies Act.
Persons exercising general executive management or significant control over company activities, even if not directors.
Authorised share capital is the max shares allowed; issued share capital is shares actually issued to shareholders.
Ordinary shares (equity, voting rights, variable dividends) and preference shares (fixed dividends, priority claims, limited voting).
Shares issued to shareholders by converting reserves into share capital without cash payment, increasing shares held but not total value.
Offering new shares to existing shareholders at a discount, allowing them to buy additional shares or sell rights to others.
Financial institutions guarantee share issues by buying any unsubscribed shares, earning commission for this service.
Portion of company profits distributed to shareholders, usually expressed as a percentage or amount per share.