Chapter 1 - Introduction To IFRS

Question 1

Which standard (as of 2025) governs presentation of financial statements?

Answer 1

IAS1.

To be replaced by IFRS18 in 2027.

Question 2

Approximately how many jurisdictions as of 2025 are using IFRS?

Answer 2

Approx 140

Question 3

What was the Norwalk agreement?

Answer 3

Agreement between US and EU standard setters to being international harmonisation of standards.

Question 4

What are the 2 different approaches to setting accounting standards?

Answer 4

1. Rules-based (detailed rules every eventuality)
2. Principle-based (general principles, practical guidance).

Question 5

Does IFRS use more of a rules-based approach or principle-based approach?

Answer 5

Principle-based.

Question 6

In a multinational entity, how do subsidiaries generally prepare their financial statements?

Answer 6

Using the local rules.

Something to be mindful of when consolidating financial statements across countries.

Question 7

What prefix does the IASB use for new standards?

Answer 7

IFRS.

E.g. IFRS 1.

Question 8

What prefix was previously used by the former IASC for accounting standards?

Answer 8

IAS.

E.g. IAS 1.

Note that some of these still exist, however are gradually being replaced or superseded.

Question 9

What is IAS 1?

Answer 9

Presentation of financial statements.

Question 10

What is the general definition of “reporting entity” under conceptually frameworks?

Answer 10

An entity that is required, or chooses to, prepare financial statements

Question 11

What happens when there is a conflict between the Conceptual Framework and a requirement in IFRS?

Answer 11

IFRS requirements apply

Question 12

What 2 conditions should be present for an item to be recognised in financial statements?

Answer 12

1. Probable that there is a an inflow/outflow of economic benefits
2. The item can be measured reliably