2015-10-07
Accounting Standards
Accountants throughout the world follow sets
of rules or standards.
Historically, the Canadian Institute of Chartered
Accountants (CICA) has established the
standards for Canadian accountants.
Why is it important to have these rules?
Accounting Standards GAAP
Accounting standards are made available in
the CICA handbook.
The most important sections of the handbook
contained the Canadian Generally Accepted
Accounting Principles (CANADIAN GAAP)
In 2006 the AcSB announced a process to
replace the Canadian GAAP with the
International Financial Reporting Standards.
(IFRS)
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2015-10-07
Accounting Standards GAAP
Moving to international standards will help
Canadian businesses communicate globally.
The start date for switching to IFRS was
January 1, 2011. This requirement was for
public companies only.
Private businesses can use IFRS or a set of
guidelines called the Accounting Standards for
Private Enterprise (ASPE)
Accounting Standard (ASPE & IFRS)
Business Entity Concept
Accounting done for a business organization must be separate
from that of the owner’s personal accounting or from that of any
other business or organization.
Separation between personal and business assets.
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Accounting Standard (ASPE)
Cost Principle
For ASPE (Accounting Standards for Private Enterprise)
Accountants record the value of assets at their historical cost
price.
Accounting Standard (ASPE)
Continuing Concern Concept
Assumption that the business will continue to
operate normally unless it is known that it will
not. Allows the reader of a balance sheet to
assume assets will be used in the normal course
of business and debts will be paid.
Accounting Standard (IFRS)
Revaluation Model
Allows for modifications to the cost principle. It outlines an
accounting procedure that allows accountants to change the value
of particular assets based on market conditions.
If a business revalued an asset that was originally worth $30,000
to $50,000 what else would have to change in order to make the
Fundamental Accounting Equation still work?
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