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FR Textbook > 1. Introduction to published accounts > Flashcards

1. Introduction to published accounts Flashcards

1
Q

What is IAS 1?

A

Presentation of Financial Statements

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2
Q

What does IAS 1 state that a complete set of financial statements comprise of?

There are 5 things

A

-a statement of financial position

-Either
a statement of profit or loss and other comprehensive income, or
a statement of profit or loss plus a statement showing other comprehensive income

  • A statement of changes in equity
  • A statement of cash flows
  • Accounting policies and explanatory notes.
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3
Q

Does IAS 1 require companies to use the titles like Statement of financial position instead of balance sheet?

A

No

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4
Q

What is described below?

The name often given to material items of income and expense of such size, nature or incidence that disclosure is necessary in order to explain the performance of the entity.

A

Exceptional items

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5
Q

What is the accounting treatment of exceptional items?

A
  • Include the item in the standard statement of profit or loss line
  • Disclose the nature and amount in the notes.
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6
Q

Give an example of when it may be more appropriate to display an Exceptional item as a separate line on the statement of profit or loss…

There are 7

A
  • Write down of inventories to net realisable value (NRV)
  • Impairment of property, plant and equipment
  • Restructuring costs
  • Gains/losses on disposal of non-current assets
  • Discontinued operations
  • Litigation settlements
  • Reversals of provisions
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7
Q

What is an appropriate title for a statement of financial position for XYZ for the year ended 31 December 2008?

A

XYZ: Statement of financial position as at 31 December 2008

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8
Q

What is the order that the sections of the statement of financial position go in?

A

Assets:
Non-Current Assets
Current Assets
Total Assets

Equity and liabilities:
Capital and reserves
Non-Current liabilities
Current liabilities
Total equity and liabilities
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9
Q

What comprises the non-current assets section of the statement of financial position?

A

Property plant and equipment
Investments
Intangibles

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10
Q

What comprises the current assets section of the statement of financial position?

A

Inventories
Trade receivables
Cash and cash equivalents
Asset held for sale

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11
Q

What comprises the Capital and reserves section of the statement of financial position?

A

Share capital
Retained earnings
Other components of equity

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12
Q

What comprises the non-current liabilities section of the statement of financial position?

A

Long term borrowings

Deferred tax

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13
Q

What comprises the current liabilities section of the statement of financial position?

A

Trade and other payables
Short-term borrowings
Current tax payable
Short-term provisions

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14
Q

What are the factors that IAS 1 use to determine if an asset is current?

A
  • It will be settled within 12 months of the reporting date, or
  • It is part of the entity’s normal operating cycle.
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15
Q

What do the “Other components of equity” section comprise of?

A
  • Revaluation surplus
  • Share premium
  • Investment reserve
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16
Q

What are the 5 headings that go along the top of the Statements of changes in equity?

A

In order

  • Share capital
  • Share premium
  • Revaluation surplus
  • Retained earnings
  • Total equity
17
Q

What is the first section of the statement of changes in equity?

A

Balance at start of period
Prior year adjustment

Restated balance

18
Q

What is the second section of the statement of changes in equity?

A

Dividends
Issue of share capital
Total comprehensive income
Transfer to retained earnings

Ending balance

19
Q

What is total comprehensive income?

A

The realised profit or loss for the period,

plus other comprehensive income.

20
Q

What is “Other comprehensive income” and what does it include?

A

Income and expenses that are not recognised in profit or loss (recorded in reserves)

  • Revaluation of NCA
  • FV through other comprehensive income financial assets
21
Q

What is the first section of the Statement of profit or loss and other comprehensive income?

A

Revenue
Cost of sales

Gross profit

22
Q

What is the second section of the Statement of profit or loss and other comprehensive income?

A

Distribution costs
Administrative expenses

Profit from operations

23
Q

What is the third section of the Statement of profit or loss and other comprehensive income?

A

Finance costs
Investment income

Profit before tax

24
Q

What is the fourth section of the Statement of profit or loss and other comprehensive income?

A

Income tax expense

Profit for the year

25
Q

What is the Other comprehensive income section of the Statement of profit or loss and other comprehensive income?

A

Gain/Loss on revaluation
Gain/Loss on fair value through other comprehensive income financial assets

Total Comprehensive income for the year

26
Q

What are the three main factors of a Profit orientated sector?

A
  • Increase shareholder wealth
  • Directors accountable to shareholders
  • External finance freely available in the form of loans and share capital.
27
Q

What are the three main factors of a Not-for-Profit orientated sector?

A
  • Achieve value for money
  • Managers accountable to trustees/government/public
  • Finance limited to donations/government subsidies
28
Q

What are the three things accounting standards are designed to do?

A
  • Measure financial performance accurately and consistently
  • Report the financial position accurately and consistently
  • Account for the directors’ stewardship of resources and assets.
29
Q

What do Not-for-profit organisations have to account for?

A
  • Their income and costs

- Their effectiveness, economy and efficiency

30
Q

Do Not-for-profit organisations have to produce financial statements?

A

No but many cases may do so

FR Textbook (23 decks)

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