Chapter 2 - Format of financial statements Flashcards

1
Q

Management need to prepare F/S on GOING CONCERN basis, what does this involve?

A
  • look 12 months from reporting date
  • disclose any uncertainties
  • disclose if not going concern
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is the accruals concept?

A

transactions recognized when they occur

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is the offsetting concept?

A

can’t do it

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What comparatives do you need?

A

Numerical and narrative

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is a current asset?

A
  • part of normal operating cycle

- settled 12 months after reporting date

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is a current liability?

A
  • part of normal operating cycle
  • settled within twelve months
  • held primarily for trading
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What are the benefits of cash flows?

A
  • factual
  • not influenced by accounting policies
  • easily understood
  • extra info
  • assess future prospects
  • pay amounts as they fall due
  • comparison
How well did you know this?
1
Not at all
2
3
4
5
Perfectly