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
2
Q
What is the accruals concept?
A
transactions recognized when they occur
3
Q
What is the offsetting concept?
A
can’t do it
4
Q
What comparatives do you need?
A
Numerical and narrative
5
Q
What is a current asset?
A
- part of normal operating cycle
- settled 12 months after reporting date
6
Q
What is a current liability?
A
- part of normal operating cycle
- settled within twelve months
- held primarily for trading
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
