Notes to Financial Statements Flashcards
These provide narrative description or disaggregation of items presented in the financial statements and information about items that do not qualify for recognition.
Notes to financial statements
What kind of description do notes to financial statements provide?
Narrative
What is the purpose of notes to financial statements?
To provide the disclosures required by PFRS
What PAS can you find rules on notes to financial statements?
PAS 1 Presentation of Financial Statements
PAS 1 provides that an entity shall, as far as practicable, present notes in what manner?
Systemic
Who requires the necessary disclosures in financial statements?
Philippine Financial Reporting Standards
In what order are notes presented? (SSSO)
- Statement of compliance with PFRS
- Summary of significant accounting policies used
- Supporting information or computation for line items presented in the financial statements
- Other disclosures such as contingent liabilities, unrecognized contractual commitments and nonfiancial disclosures
Should you always stick to the order of notes provided by PAS 1 or can you vary it however you like
It may be varied in some circumstances but it must still be systematic as far as practicable.
Can you disclose in your notes that the financial statements comply with PFRS if there are some requirements you failed to comply with?
No.
These are the specific principles, methods, practices, rules, bases and conventions adopted by an entity in preparing and presenting financial statements.
Accounting policies
These set out the required recognition and measurement principles that an entity shall follow in preparing its financial statements, and shall often prescribe the accounting policy to be adopted.
Accounting Standards
What should the summary of significant accounting policies disclose?
a. the measurement basis used
b. the accounting policies used
True or False: The measurement basis used in financial statements do not really affect the users’ analysis.
False. There is a significant effect
What are the different kinds of measurement bases?
- historical cost
- current value
a. fair value
b. value in use
c. fulfillment
d. current cost
True or False: In deciding whether a particular accounting policy should be disclosed, there is no need to consider the users as long as it is in line with the PAS and PFRS.
False
True or False: Even judgment by the management made in the process of applying accounting policies should be disclosed.
True
True or False: The disclosure of information about judgment is mandatory.
True
Where in the notes to financial statements should judgments by the management be made in?
Summary of significant accounting policies
True or False: You can choose to disclose the uncertainty and its estimations or not.
False. It is mandatory.
If you used an alternative instead of the traditional accounting policy, do you still need to disclose it?
All the more
With respect to the assets and liabilities presented in the notes as estimation uncertainties or assumptions, what are its details that need to be shown in the notes?
Nature and carrying amount
What is the first item in presenting the notes to financial statements?
Compliance with PFRS
