8.1 Introduction to single entity accounts Flashcards
1
Q
IAS1 Presentation of FS
A
prescribes what a set of FS should contain and how they should be presented
2
Q
IAS1 Purpose of FS
A
- provide info about the financial position, performance and cash flows of an entity that is useful in making economic decisions
- they will also show how effectively management has looked after the resources of the entity, ie. assess the stewardship of management
3
Q
IAS1 Contents of complete set of FS
A
- a statement of financial position at the end of the period
- a statement of profit or loss and other comprehensive income for the period
- a statement of changes in equity for the period
- a statement of cash flows for the period
- notes, comprising significant accounting policies and other explanatory info
4
Q
IAS1 also requires in addition to FS
A
- comparative info to be shown as prescribed by the std
- entities are also encouraged to present a financial review by management which describes and explains the main features of the entity’s financial performance and position
5
Q
Responsibility for FS
A
- The board of directors (and/or other governing body) of an entity is responsible for the preparation and presentation of FS
6
Q
Concepts and other considerations affecting FS
A
- Fair presentation
- Going concern
- Consistency
- Accruals basis
- Materiality and aggregation
- Off setting
- Comparative info
7
Q
IAS1 - Fair presentation
A
- FS shall present fairly the financial position, performance and cash flows of an entity
- Entities that comply with all relevant accounting stds will virtually always achieve this objective
8
Q
A fair representation requires that entities
A
- show a faithful representation of the effects of transactions
- select definitions and recognition criteria in accordance with conceptual framework and apply accounting policies in accordance with IAS8 Accounting Policies, Changes in Accounting Estimates and Errors
- present info in a way that provides relevant, reliable, comparable and understandable info
- provide additional disclosures if the requirements of and IFRS std or IAS are not sufficient to enable users to understand the impact of the transaction
9
Q
If an entity feels compliance with an IFRS std would be misleading and it needs to depart from the requirement in order to show a fair presentation, the following disclosures should be made (in rare cases)
A
- that management have concluded that the FS do fairly present the financial position, performance and cash flows
- that the entity has complied with IFRS stds except that it has departed from a Std to show a fair presentation
- the IFRS std that has been departed from and the nature of the departure, ie. the treatment the Std would require, the reason why this would be misleading and the treatment used instead
- the financial impact of the departure on profit/loss, assets, liabilities, equity and cash flows
10
Q
IAS1 - Going concern
A
- FS should be prepared on the going concern basis unless management intend to liquidate or cease trading
- this means FS or prepared on the assumption that the entity will continue to trade for the foreseeable future
11
Q
IAS1 - Accruals basis
A
- entities are required to prepare their FS (except for cash flow info) using the accruals basis of accounting
- this means transactions should be recorded in the accounting period to which they relate regardless of whether or not cash has been received or paid
- it also means that expenses should be recognised in SOPLOCI so as to match against directly related income
12
Q
IAS1 - Consistency
A
- Presentation and classification of items should be consistent from one period to the next
- Changes are allowed if required by an IFRS std or it is deemed more appropriate to change the presentation of info
13
Q
IAS1 - Materiality and aggregation
A
- Info is material if omitting, misstating or obscuring it could reasonable be expected to influence decisions that the primary users of general purpose FS make on the basis of those FS, which provide financial info about a specific reporting entity
- Each material class of similar items should be presented separately
- Immaterial amounts should be aggregated with amounts of a similar nature (don’t need to be shown separately)
14
Q
IAS1 - Offsetting
A
Assets and liabilities, and income and expenses, should not be offset except when it is required or allowed by an IFRS
15
Q
IAS1 - Comparative info
A
should be disclosed in respect of previous period for all amounts reported unless an IFRS requires or allows otherwise
