ch 2 legal requirements quiz Flashcards
If Adjusting entry this means
New information provided about the assets owned at the end of the reporting period
If non adjusting this means
issue arose after the end of the reporting period, after affects may be material and impact on future
Relevant standard AASB 108 Accounting policies, changes in accounting estimates and errors
what must be done if this is the case
prior year amounts might need to be amended
change opening balance of earliest year affected
disclose by way of adjustments or notes
Relevant standard AASB 108 Accounting policies, changes in accounting estimates and errors
under what circumstance can an accounting policy be changed
1) if it is required by an accounting standard
2) the change results in financial statements PROVIDING MORE RELIABLE AND RELEVANT INFORMATION about the effects of transactions
Relevant standard AASB 101 Presentation of financial statements
Eg, as a result of competition , inventory must be written down, describe the effect
a write down of inventory must be recognised in financial statements
- the income statement will need an adjusting entry as stock is being recognised at its net realisable value
Relevant standard AASB 101 Presentation of financial statements
Eg, as a result of competition , inventory must be written down, describe the effect of how this in journals
write down carryuing value of inventory to its net realisable value
DR INVENTORY WRITE DOWN
CR INVENTORY
Relevant standard AASB 110 Events after the reporting date
(non adjusting events not recognised in FS, but if material are disclosed in note)
Describe para 10
PARA 10:
entity shall not adjust amounts recognised in financial statements to reflect non adjusting events after the reporting period
Relevant standard AASB 110 Events after the reporting date
Describe para 12
If events are MATERIAL
disclose by way of note such that it describes
- the nature of the event - estimate of financial effect or statement
