Chapter 3 - Performance Reporting And Performance Appraisal

Question 1

A complete set of financial statements include:

Answer 1

• a statement of financial position
• a statement of profit and loss and other comprehensive income
• a statement of cash flows
• a statement of changes in equity
• disclosure notes

Question 2

What does IAS 1 say when an current asset should be on classified?

Answer 2

• it is realised or confused in the entities normal trading cycle
• it is held for trading
• it will be realised within 12 months of the reporting dates

Question 3

What does IAS 1 say when an current liability should be on classified?

Answer 3

• it is settled during the entity’s normal trading cycle
• it is held for trading
• it will be settled within 12 months of the reporting date

Question 4

What are examples of items which will not be reclassified to profit or loss in the future?

Answer 4

• changes in revaluation surplus
• remeasurements components
• remeasurements of investments in equity instruments

Question 5

What are examples of items which will be reclassified to profit or loss in the future?

Answer 5

• foreign exchange gains or losses on the translation of a foreign operation
• gains and losses on cash flow hedges
• remeasurements of investments in debt instruments

Question 6

What are the three headings under statement of cash flows?

Answer 6

• cash flows from operating activities
• cash flows from investing activities
• cash flows from financing activities

Question 7

What does it say IAS 1 say entities must?

Answer 7

• disclose their compliance with IFRS Standards
• disclose the accounting policies used
• disclose key uncertainties
• present disclosure notes in a systematic order

Question 8

When does an item become material?

Answer 8

If an item is material if it’s omission or misstatement might influence the economic decisions of the users of the financial statements

Question 9

What are accounting policies?

Answer 9

The principles and rules applied by an entity which specify how transactions are reflected

Question 10

When should changes to accounting policies be reflected?

Answer 10

Result in more reliable or relevant presentation

Question 11

How should an accounting policy be adjusted?

Answer 11

Retrospectively

Question 12

What is a discontinued operation?

Answer 12

Is a component of an entity that has been sold or classified as held for sale

Question 13

When is an asset or disposal group held for sale?

Answer 13

If the value will be mainly recovered through a sales transaction and the sale is highly probable

Question 14

How does IFRS 5 state that a discontinued operation be presented?

Answer 14

The profit and loss on operation and any profit or loss on disposal. The comparatives should be updated and this should be shown as a single line

Question 15

What are accounting policies?

Answer 15

Principles and rules applied by an entity which specify how transactions are reflected in financial statements

Question 16

When should a change to an accounting policy be made?

Answer 16

When it will result in more reliable or relevant presentation

Question 17

If an accounting policy is change, how does this effect the accounts?

Answer 17

Comparative information is re-states as if the new policy had always been applied and the retained earnings is adjusted

Question 18

How are accounting estimates recorded?

Answer 18

Prospectively, only adjusting this year and future years

Question 19

What are accounting estimates?

Answer 19

Assessment of the present status of assets and liabilities as well as their expected future benefits and obligations

Question 20

How should prior period errors be corrected?

Answer 20

Retrospectively

Question 21

What is an interim financial report?

Answer 21

One which covers less than a financial year

Question 22

What should an interim report include?

Answer 22

• financial position
• profit and loss
• cash flows
• changes in equity
• disclosure notes