What is the Full Disclosure Principle? Definition, Example, Checklist

The full disclosure principle is a concept that requires a business to report all necessary information about their financial statements and other relevant information to any persons who are accustomed to reading this information. What is the Full Disclosure Principle? The full disclosure principle refers to the concept that suggests that a business should report … Read more

What are Franking Credits? and How to Calculate them

Franking credits, franked dividends, fully franked, imputation credits, dividend imputation – you could be forgiven if these terms have your head spinning. Dividends, as you may know, are a portion of a company’s earnings issued to reward its shareholders. And since a dividend is a form of income, you’d normally pay tax on it as … Read more

What Are The Functions of accounting

The main functions of accounting are to store and analyze financial information and oversee monetary transactions. Accounting is used to prepare financial statements for a company’s employees, leaders, and investors. Accounting also functions to ensure the payment of funds into and out of a company. What is financial accounting? As mentioned above, financial accounting is … Read more

Notes to the financial statements

Notes to the financial statements disclose the detailed assumptions made by accountants when preparing a company’s: income statement, balance sheet, statement of changes of financial position, or statement of retained earnings. The notes are essential to fully understanding these documents. What are the notes to the financial statements? Notes are an integral part of a complete … Read more

What is Financial Statement Manipulation?

Financial statement manipulation refers to the practice of using creative accounting tricks to make a company’s financial statements reflect what the company wants its performance to look like rather than its actual performance. Why do companies manipulate financial statements? The decision to manipulate financial statements lies with a company’s management. Usually, they may have several reasons … Read more

What are Funds From Operations? Explained

Funds From Operations (FFO) is used to measure the cash flow from operations and thus is similar to ‘Cash Flow from Operations.’ However, it is generally used in reference to cash flows generated by ‘Real Estate Investment Trust’ (REIT). What are the Funds From Operations? FFO is a performance indicator created by the National Association of Real … Read more

Financial Accounting Standards Board (FASB)

The Financial Accounting Standards Board (FASB) is a private standard-setting body whose primary purpose is to establish and improve Generally Accepted Accounting Principles (GAAP) within the United States in the public’s interest. The Securities and Exchange Commission (SEC) designated the FASB as the organization responsible for setting accounting standards for public companies in the US. … Read more

Introduction to Financial Accounting Theory

An accounting theory is a notion that uses speculations, methodologies, and frameworks in the study of financial reporting (as well as how financial reporting principles are applied in the accounting industry).  Basically, accounting theories serve as a basis for the understanding of financial reporting and how companies channel their financial statements using the appropriate strategies.  … Read more

What is an Extraordinary Item? Explained with example

An extraordinary item is an accounting term that refers to an abnormal gain or loss that is not generated from the ordinary business operations of a company, is infrequent in nature, and is unlikely to recur in the foreseeable future. What are Extraordinary Items? An extraordinary item in accounting is an event or transaction that … Read more