Preparation Of Financial Statements Part A

Question 1

Current asset

Answer 1

• it is expected to be realised in, or is held for sale or consumption, in the normal course of the entity’s operating cycle
• it is held primarily for trading purposes or for the short term and expected to be realised within 12 months of the reporting date.
• cash or cash equivalent not restricted in use.

Question 2

Current liability

Answer 2

• expected to be settled in the normal course of the entity’s operating cycle.
• it is due to be settled within 12 months of the reporting date.
• the entity does not have an unconditional right to defer payment of the liability for at least 12 months after the reporting date.

Question 3

Non current liability

Answer 3

Not due for settlement within 12 months

Question 4

Accounting policies

Answer 4

Principles, bases, conventions, rules and practices adopted by an organisation in preparing its financial statements

Question 5

Property, plant and equipment

Answer 5

Tangible assets that are

• held for use in the production or supply of goods and services, for rental to others, or for administrative purposes
• expected to be used during more than one accounting period,

Question 6

Depreciation

Answer 6

Measure of the amount of economic benefits of the non current asset that have been consumed in the period