IFRS Flashcards

1
Q

Need for one set of international accounting standards

A

Multinational corporations

Mergers and acquisitions

Information technology - removing international barriers

Financial markets

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2
Q

Concern of making foreign companies follow SOX

A

Higher costs of SOX compliance are making the U.S securities markets less competitive

whether the benefits exceed the costs

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3
Q

Principles based

A

IFRS

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4
Q

rules based

A

GAAP

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5
Q

Do foreign companies need to reconclie their accounting with GAAP

A

No

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6
Q

Asset - IASB

A

A resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity

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7
Q

Liabilities - IASB

A

A present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits

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8
Q

Equity - IASB

A

A residual interest in the assets of the entity after deducting all its liabilities

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9
Q

Income - IASB

A

Increases in economic benefits that result in increases in equity.

Includes revenues and gains

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10
Q

Expenses - IASB

A

Decreases in economic benefits that result in decreases in equity.

Losses that are not the result of ordinary activities

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11
Q

Title on IFRS balance sheet

A

Uses “statement of financial position” instead

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12
Q

Order on “statement of financial position”

A

Noncurrent assets

Current assets

Equity

Noncurrent liabilities

Current liabilities

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13
Q

Order of current assets - IFRS

A

reverse order of liquidity

ex. cash is last

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14
Q

Term for stock - IFRS

A

shares

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15
Q

Term for common stock - IFRS

A

share capital - ordinary

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16
Q

How often are financial statements prepared - IFRS?

A

annually

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17
Q

IFRS applies what kind of value

A

fair value

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18
Q

Transaction analysis is the________ under IFRS and GAAP

A

same

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19
Q

_______ is the basis for accounting systems worldwide

A

double-entry system

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20
Q

Trial balance is _________ as the text book

A

the same

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21
Q

Expanded accounting equation under IFRS

A

Assets = liabilities + share capital - dividends + revenues - expenses

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22
Q

General policy for using proper currency symbols both IFRS and GAAP

A

Currency signs are shown in trial balances and financial statements

23
Q

Cash basis and IFRS

A

Cash basis is NOT in accordance with IFRS

24
Q

Common assumption under IFRS and GAAP

A

periodicity assumption

25
GAAP revenue recogntion
100 rules
26
IFRS revenue recognition
one rule
27
Revenue Recognitoin GAAP and IFRS
General revenue recogntion principles are the same
28
GAAP revenue recognition defintion
realized, realizable and earned
29
IFRS revenue recogntion definition
Probability that the economic benefits associated with the transaction will flow to the company selling Must be capable of being measured reliably
30
Revaluation of land and buidlings - IFRS
is permitted
31
Depreciation based on revaluation of assets
Allowed in IFRS not permitted under GAAP
32
IFRS income
includes revenues and gains (outside normal course of business)
33
Closing process IFRS and GAAP
applicable to all companies the same
34
Revenue Recognition Project
Will place more emphasis on when changes occur in assets and liabilities
35
Income statement IFRS and GAAP
Income statement is required under IFRS and GAAP
36
Inventory System under GAAP and IFRS
Companies can choose to use either a perpetual or a periodic system under either
37
Inventories under IFRS
Held-for-sale in the ordinary course of business, in the process of production for such sale, or in the form of materials or supplies to be consumed in the production process or in providing services
38
Classification of income statement under GAAP
Classified by function ex. administration, distribution
39
Classification of income statement under IFRS
either nature or function nature: salaries, depreciation expense, utilities expense \*if company does functional method, must disclose by nature in the notes to financial statements
40
Presentation of Income Statement: GAAP and IFRS
GAAP - either single step or multiple-step IFRS - does not mention either
41
Revaluation adjustments - IFRS
Initial gains and losses resulting from revaluation are reported as adjustments to equity often as **other comprehensive income**
42
IFRS and equity
Because of revaluation, IFRS has more transactions that affect equity but not net income
43
IAS 1 "Presentation of Financial Statements"
Provides general guidelines for the reporting of income statement information
44
Comprehensive income under IFRS
includes unrealized gains and losses that are not included in the calculation of net income
45
Years of income statement
IFRS - 2 years GAAP - 3 years
46
New approach of income statement
Better prepresent how businesses are run
47
Major differences of inventory reporting
IFRS prohibits use of LIFO cost determines lower-of-cost-or-market inventory valuation differently
48
Who owns the goods - goods in transit or consigned goods- are what?
The same under IFRS and GAAP
49
Inventory valuation - IFRS
net realizable value = the best estimate of the net amounts that inventories are expected to realize
50
Write-downs IFRS and GAAP
can be reversed under IFRS cannot be reversed under GAAP
51
Valuation of inventory - IFRS
Does not permit the option of valuing inventories at fari value requries inventory to be written down, but cannot be wrriten up above its original cost
52
Specific Identification
Must be used under IFRS if the inventory items are not interchangeable
53
IFRS requires the following (ending inventory)
Ending inventory is wrriten down to net realizable value and may be written up in future periods to its net realizabl value but not above its original cost