ACCA SBR key terms

A set of fundamental principles issued by the IASB that guides the development of IFRS Standards and helps preparers apply them consistently when no specific standard exists.

A qualitative characteristic meaning information is capable of making a difference in users' decisions by having predictive value, confirmatory value, or both.

A qualitative characteristic requiring information to be complete, neutral and free from error, depicting the economic substance of transactions rather than merely their legal form.

Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that primary users make based on the financial statements.

The exercise of caution when making judgements under conditions of uncertainty, so that assets and income are not overstated and liabilities and expenses are not understated.

An entity that is required, or chooses, to prepare general purpose financial statements, which provide information about the entity's economic resources and claims against it.

The assumption that an entity will continue in operation for the foreseeable future, with neither the intention nor the need to liquidate or curtail materially the scale of its operations.

The principle that transactions and events should be accounted for and presented in accordance with their economic substance, not merely their legal form.

A framework explaining relationships where principals (shareholders) delegate decision-making to agents (managers), creating potential conflicts of interest that corporate governance and reporting seek to mitigate.

A view that organisations should consider the interests of all parties affected by their activities, not only shareholders, when making decisions and reporting performance.

An investor controls an investee when it is exposed to, or has rights to, variable returns and has the power to affect those returns through its power over the investee.

The process of combining the financial statements of a parent and its subsidiaries into a single set of financial statements as if they were one economic entity.

The equity in a subsidiary not attributable, directly or indirectly, to the parent, presented separately within consolidated equity.

An asset representing future economic benefits arising from assets acquired in a business combination that are not individually identified and separately recognised, measured as the excess of consideration over net identifiable assets.

A transaction or event in which an acquirer obtains control of one or more businesses, accounted for using the acquisition method under IFRS 3.

A business combination in which the net fair value of identifiable assets acquired and liabilities assumed exceeds the consideration transferred, with the gain recognised in profit or loss.

An annual test (or more frequent if indicators exist) comparing the recoverable amount of a cash-generating unit containing goodwill with its carrying amount, recognising any excess as a loss.

The higher of an asset's fair value less costs of disposal and its value in use, used to determine whether an impairment loss should be recognised.

The present value of the future cash flows expected to be derived from an asset or cash-generating unit, including its eventual disposal.

The smallest identifiable group of assets that generates cash inflows largely independent of the cash inflows from other assets or groups of assets.

The five-step model requiring identification of a contract, performance obligations, transaction price allocation, and recognition of revenue when control of promised goods or services transfers to the customer.

A promise in a contract with a customer to transfer a distinct good or service, or a series of distinct goods or services that are substantially the same.

The amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services, excluding amounts collected on behalf of third parties.

An entity's right to consideration in exchange for goods or services transferred when that right is conditional on something other than the passage of time.

An entity's obligation to transfer goods or services to a customer for which the entity has received consideration (or the amount is due) from the customer.

The non-cancellable period of a lease, together with periods covered by an option to extend or terminate if the lessee is reasonably certain to exercise that option.

An asset representing a lessee's right to use an underlying asset for the lease term, initially measured at the amount of the lease liability plus certain direct costs.

The present value of lease payments not paid at the commencement date, discounted using the interest rate implicit in the lease or the lessee's incremental borrowing rate.

Tax payable or recoverable in future periods arising from temporary differences between the carrying amount of an asset or liability and its tax base, and from unused tax losses.

The difference between the carrying amount of an asset or liability in the statement of financial position and its tax base, which will give rise to taxable or deductible amounts in future periods.

The amount attributed to an asset or liability for tax purposes, used to determine temporary differences for deferred tax accounting.

A contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

The amount at which a financial asset or liability is measured at initial recognition minus principal repayments, plus or minus cumulative amortisation using the effective interest method, adjusted for impairment.

A method of calculating the amortised cost of a financial asset or liability and allocating interest income or expense over the relevant period using the effective interest rate.

A probability-weighted estimate of credit losses over the expected life of a financial asset, reflecting cash shortfalls discounted at the original effective interest rate.

A measurement category for financial instruments where changes in fair value are recognised in profit or loss as they arise, used for assets held for trading or designated at inception.

A measurement category for certain financial assets (such as equity investments designated at inception or debt instruments with qualifying cash flow characteristics) where fair value changes are recognised in other comprehensive income.

The process of examining financial statements using ratios, trends and comparisons to assess an entity's profitability, liquidity, solvency and efficiency for decision-making.

A technique that expresses relationships between financial statement items as percentages or multiples to evaluate performance, position and changes over time or against benchmarks.

A method of expressing each line item in a financial statement as a percentage of a common base (such as total assets or revenue) to facilitate comparison across periods or entities.

The examination of financial statement items over several periods to identify patterns, growth rates or deterioration that may not be apparent from a single period's figures.

Disclosure of an entity's environmental, social and governance performance and impacts, often prepared under frameworks such as the ISSB standards or GRI, to inform stakeholders.

A concise communication about how an organisation's strategy, governance, performance and prospects create value over the short, medium and long term, using the six capitals framework.

The resources and relationships used and affected by an organisation in integrated reporting: financial, manufactured, intellectual, human, social and relationship, and natural capital.