Asset, Liabilities & The Accounting Equation

Question 1

How accounting principles & qualitative characteristics are applied is explained in ?

Answer 1

IFRS [ International Financial Reporting Standard ]

Question 2

Who published the Framework & the standard

Answer 2

IASB [ International Accounting Standard Board ]

Question 3

Who review on a timely basis widespread accounting issues arisen within context of IFRS Accounting Standard & provide authoritative guidance?

Answer 3

IFRS Interpretations Committee

Question 4

What is IFRS Foundation?

Answer 4

Not-for-profit responsible for developing global accounting and sustainability disclosure standards, known as IFRS Standards

Promotion of (IFRS Standards) through (IASB)

Oversees the work of the IASB, the structure, and strategy, and has fund raising responsibility.

Question 5

IFRS Foundation VS IASB

Answer 5

IASB work under the sight of IFRS Foundation

IASB –> focus on technical side of developing IFRS
IFRS Foundation –> oversight IASB, promote the use of IFRS

Question 6

IASB Job

Answer 6

• Development and publication of IFRS Accounting Standards
• Approving Interpretations of IFRS Accounting Standards as developed by the IFRS Interpretations Committee

Question 7

What IFRS Advisory Council do ?

Answer 7

Provide strategic support and advice to the IFRS Foundation & IASB

Question 8

IFRS Interpretation Committee

Answer 8

• Responds to questions about the application of the Accounting Standards
• Supporting the consistent application of IFRS Accounting Standards.

Question 9

What does IFRS 15 Revenue from Contracts with Customers states ?

Answer 9

Sale of goods is not recognised until control of the goods or services have been transfered.

Credit sales are recorded when goods are DELIVERED & invoice has been issued

Question 10

Are employees considered as an asset?

YES/NO

Answer 10

NO

Asset by definition is economic resources that you can control.

You can’t control employees (they can leave & resign)

Therefore, costs incurred by employees is an expense, not an asset

Question 11

IAS 1 defines current assets as

Answer 11

• Expected to be realised in the entity’s normal operating cycle and within 12 months after the reporting period
• Held primarily for trading
• Cash & cash equivalent

Question 12

IAS 1 defines current liabilities as

Answer 12

• Expected to be settled within the entity’s normal operating cycle and due to be settled within 12 months
• Held for trading
• The entity does not have the right at the end of the reporting period to defer settlement beyond 12 months

Question 13

What is a lease ?

Answer 13

Contractual arrangement between two parties to use an asset in exchange for periodic payments

Asset is also included in the business’s statement of financial position - although it does not legally own the asset, it controls it.