Company Financial Stmts Flashcards
What is the format of financial statements prescribed by?
IAS 1 Presentation of Financial Statements
What makes up a complete set of statements in accordance with IAS1?
- stmt Financial Position
- Stmt of profit or loss and other comprehensive income
- stmt of changes in equity
- stmt of cash flows
- Notes, summary of significant accounting policies and other explanatory notes
Where does profit for year from P/L go?
To Retained Earnings
- in stmt change in equity
- stmt FP
How else can Non-Currently Assets be referred to?
- long term
- fixed
What is the difference between how assets are shown in Sole traders stmts vs Companies?
- same however only show Carrying Amounts, detail in notes
If Current Assets > Current Liabilities what is the excess called?
- working capital
- net current assets
What are the criteria to be classified as current asset?
- to be realised within 12 months (most important)
- to be realised/held for sale in normal operating cycle
- primary purpose to be traded
- cash/equivalent and not restricted
Operating Cycle of a Company
time between acquisition and realisation in cash/equivalent
What are the criteria for current liabilities?
- to be realised/due within 12 months
- settled within entity’s normal operating cycle
- for purpose of trading
others include bank overdraft, income taxes
How else are retained earnings described?
= Revenue Reserve
= Accumulated Profits
= Undistributed Profits
= Unappropriated Profits
Why are Retained Earnings particularly important if the company make a loss one year?
previous retained earnings from when profit was made can be used to paid dividends still
What does a debit balance on retained earnings account mean?
- company has accumulated losses
- very occasional
What is included in stmt of profit or loss and other comprehensive income?
- all realised and unrealised gains/losses in one statement of performance
Realised gains/Losses
- have happened in year
- profit for the year
Unrealised Gains/ Losses
- not happened yet, not retained earnings, not real
- revaluation gains
How can Statement of Profit or Loss and other comprehensive income be presented?
- as a single statement, other comp income added on at bottom after Profit for year
- as two separate statements with profit for year brought into comp income
What is the layout of Other Comprehensive Income?
….Profit for year
Other Comprehensive Income
Gains on Property Revaluation
Total comprehensive income for year
Where is property revaluation shown in stmts?
- Other Comprehensive Income
- Changes in equity
What is the point of stmt of changes in equity?
- shows movements in entity’s equity for the period
- how/why got from last years equity to this years
What accounts may be included in the changes of equity stmt?
- share capital
- share premium
- retained earnings
- revaluation surplus
- any other reserves
- total
What are the events that may be included in stmt of changes in equity?
- issue of share capital
- dividends
- total comprehensive income ( can be split between profit/other comp income)
- transfer to retained earnings
When would a transfer from revaluation surplus to retained earnings be allowed?
Under IAS 16
- annually the difference between depreciation calculated on revalued assets and historic cost depn can be transferred- as revalue is only estimate, cost is still real value
- on disposal, balance on revaluation surplus can be transferred
What is the double entry for transfer from revaluation surplus to retained earnings?
DR Revaluation Surplus
CR Retained Earnings
What is the point of Notes in financial statements?
- provide more detail to users of accounts
- on the face only want as little detail while still complying with standards
What should a note for tangible non-current assets include?
reconciliation of opening/closing amounts at begin/end of period
For all different categories- land/buildings, machinery, plant, office equipment
Carrying amount at begin period
Additions
Revaluation Surplus
Depreciation Chg
Disposals
Carrying Amounts at end of period
Current years:
Cost/Valuation
Accumulated Depreciation
Carrying Amounts
Last years:
Cost/Valuation
Accumulated Depreciation
Carrying Amounts
What should also be disclosed/written in note for Tangile NCA for property, plant and equipment?
- accounting policies
For each class - depreciation methods
- useful lives/depreciation rates
- total depreciation
- gross amount on depreciable assets and related accumulated depn at begin/end
What should also be disclosed/written in note for Tangile NCA for revalued assets?
- effective date
- independent valuer involved?
- carrying amount for each class that would have been included had asset been carried at cost less depn
- revaluation surplus
What should be included in a note on intangible non-current assets?
For all classes- development expenditure
Carrying amount at begin
additions
Amortisation charge
Disposals
Carrying amount at end of
Current Years:
Cost
Accumulated amortisation
Carrying amount
Previous years:
Cost
Accumulated amortisation
Carrying Amount
What written disclosure notes need to be included with intangible NCA?
- accounting policy
for each class - method of amortisation
- useful life/amortisation rates
- gross carrying amount, accumulated amortisation
- accumulated impairment losses at begin/end- fall in value
- carry amount of internally generated intangible assets
- line of P/L in which amortisation is included
What should be included in a note for inventory?
Raw materials
Work in Progress
Finished Goods
Total
What should be included in note on provisions?
Movement
provisions at begin
Increase in provision in period
Released in period (amount used)
end of period
for each class that would
- disclosure of background
- uncertainties
- nature of provision
- expected timing
- major assumptions
- expected reimbursements
- whether any asset recognised for above
What should the note on contingent liabilities contain?
unless remote
- description of nature
- estimate of financial effect
- uncertainties - amount/timing
- possibility of reinbursement
What should the note on contingent assets contain?
Where inflow of economic benefit probable:
- description of nature
estimate of financial effect
What should a note on events after reporting period include?
for non-adjusting events after reporting period
- nature of event
- estimate of financial effect
what does IFRS 15 explain?
Revenue from Contract with Customers
- how revenue should be recognised
- recognised when there is a transfer of control
When can revenue be recognised as transfer of control?
- from entity supplying to customer
- entity has present right to payment for asset
- customer has legal title to asset
- entity has transferred physical possession of asset
- significant risks/rewards of ownership have been transferred to customer has legal
