Chapter 3 - The Statement Of Financial Position

Question 1

IAS 1

Answer 1

IAS1 Identifies:

Purpose of financial statements

Complete set of financial statements

Question 2

A complete set of financial statements per IAS1 includes:

Answer 2

P&L

Statement of financial position

Statement of changes in equity

Statement of cash flows

Notes to financial statements

Question 3

What must be displayed on financial statements?

Answer 3

Name

Single company or group

Period end date

Currency

Rounding level i.e £’000

Question 4

What does IAS 1 state?

Answer 4

Financial statements shall present fairly the financial position, financial performance and cash flows of an entity

Question 5

Which 5 fundamental accounting concepts does IAS 1 require?

Answer 5

Accruals

Going concern

Consistency - of presentation and classification from on period to the next

Offsetting - Assets & Liabilities should not be offset against each other

Materiality and aggregation - each material class of similar items should be presented seperate LG

Question 6

What should be included in the SOFP?

Answer 6

Intangible assets
Property, plant & equipment
Investment property
Inventories
Trade and other receivables
Cash and other equivalents
Trade and other payables
Provisions
Financial liabilities 
Liabilities and assets for current tax
Liabilities and assets for deferred tax
Investments accounted for using the equity method
Non controlling interest
Issue capital and reserves attributable to owners

Question 7

What are bonus shares?

Answer 7

No money received
Share capital must increase by the number of shares issued x nominal value
For existing shareholders
In proportion to the existing holding

Question 8

What’s are rights shares?

Answer 8

Money is received
Share capital must increase by the number of shares issued x nominal value
For existing shareholders
In proportion to their existing holding
Issue is usually at a premium
Issued at price below market value

Question 9

What are the types of reserves?

Answer 9

Revaluation reserve

Retained earnings

Question 10

What is a revaluation reserve?

Answer 10

This reserve would arise if you revalue an asset

Question 11

What are retained earnings?

Answer 11

Accumulation of profits and losses made over the year after deducting and dividends