Page 57 - CAPE Financial Services Syllabus Macmillan_Neat

UNIT 2
MODULE 3: FINANCIAL REPORTING (cont’d)
SPECIFIC OBJECTIVES
Students should be able to:
3. describe the importance of
financial reports as it relates to
providing useful information for
decision-making;
CXC A38/U2/16
CONTENT
(a) The conceptual framework for financial
reporting.
(i) Objectives: useful in investment and
credit decisions; useful in assessing
future cash flows; firms’ resources;
claims to resources.
(ii) Qualitative characteristics: for
example, relevance; reliability;
comparability; consistency.
(iii) Elements: assets; liabilities; equity;
revenues; expenses; gains and
losses.
(iv) Assumptions: economic entity; going
concern; monetary unit; and
periodicity.
(v) Principles: historical cost; revenue
recognition; matching; and full
disclosure.
(vi) Constraints: cost benefit; materiality;
industry practice; and conservatism.
(b) The components of the balance sheet,
income statement, other comprehensive
income, cash flow statement and notes to
the financial statements.
(c) The significance of the Management
Discussion and Analysis (MD&A) section.
(d) Components of a simplified bank’s balance
sheet: reserves, capital, bonds, discount
loans.
(e) Components of a bank’s balance sheet.
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