Chapter 3 - Performance Reporting And Performance Appraisal Flashcards
A complete set of financial statements include:
- 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
What does IAS 1 say when an current asset should be on classified?
- 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
What does IAS 1 say when an current liability should be on classified?
- 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
What are examples of items which will not be reclassified to profit or loss in the future?
- changes in revaluation surplus
- remeasurements components
- remeasurements of investments in equity instruments
What are examples of items which will be reclassified to profit or loss in the future?
- 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
What are the three headings under statement of cash flows?
- cash flows from operating activities
- cash flows from investing activities
- cash flows from financing activities
What does it say IAS 1 say entities must?
- disclose their compliance with IFRS Standards
- disclose the accounting policies used
- disclose key uncertainties
- present disclosure notes in a systematic order
When does an item become material?
If an item is material if it’s omission or misstatement might influence the economic decisions of the users of the financial statements
What are accounting policies?
The principles and rules applied by an entity which specify how transactions are reflected
When should changes to accounting policies be reflected?
Result in more reliable or relevant presentation
How should an accounting policy be adjusted?
Retrospectively
What is a discontinued operation?
Is a component of an entity that has been sold or classified as held for sale
When is an asset or disposal group held for sale?
If the value will be mainly recovered through a sales transaction and the sale is highly probable
How does IFRS 5 state that a discontinued operation be presented?
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
What are accounting policies?
Principles and rules applied by an entity which specify how transactions are reflected in financial statements
When should a change to an accounting policy be made?
When it will result in more reliable or relevant presentation
If an accounting policy is change, how does this effect the accounts?
Comparative information is re-states as if the new policy had always been applied and the retained earnings is adjusted
How are accounting estimates recorded?
Prospectively, only adjusting this year and future years
What are accounting estimates?
Assessment of the present status of assets and liabilities as well as their expected future benefits and obligations
How should prior period errors be corrected?
Retrospectively
What is an interim financial report?
One which covers less than a financial year
What should an interim report include?
- financial position
- profit and loss
- cash flows
- changes in equity
- disclosure notes
