Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

ConceptuaL Framework and Accounting Standards > Presentation of Financial Statements International Accounting Standards (IAS) 1 > Flashcards

Presentation of Financial Statements International Accounting Standards (IAS) 1 Flashcards

1
Q

is to prescribe the basis for presentation of general-purpose financial statements,

A

IAS 1 (2007)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

to ensure comparability both with the entity’s financial statements of previous periods and with the financial statements of other entities

A

IAS 1 (2007)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

sets out the overall requirements for the presentation of financial statements,

A

IAS 1

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

guidelines for their structure and minimum requirements for their content.

A

IAS 1.1

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Standards for recognizing, measuring, and disclosing specific transactions are addressed in other Standards and Interpretations.

A

IAS 1.3

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q
  • IAS 1 applies to all general-purpose financial statements that are prepared and presented in accordance with International Financial
    Reporting Standards (IFRSs). [IAS 1.2]
  • General purpose financial statements are those intended to serve users who are not in a position to require financial reports tailored to their particular information needs. [IAS 1.7]
A

SCOPE

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Are statements issued to communicate accumulated and processed financial information to users.

A

Financial Statement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

These are structured representation of the financial position, financial performance, and cash flows of an entity.

A

Financial Statement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

financial statements provide financial information to users who are not in a position that will require an entity to prepare tailored-fit financial statements for their particular needs.

A

General Purpose of Financial Statement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

is to provide and communicate information about the financial
position, financial performance, and cash flows of an entity that is useful to a wide range of users in making economic decisions.

A

Objective of Financial Statement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

financial statements provide information about an
entity’s:

A
  • assets
  • liabilities
  • equity
  • income and expenses, including gains and losses
  • contributions by and distributions to owners (in their capacity as
    owners)
  • cash flows
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Components of Financial Statement

A
  1. Statement of Financial Position
  2. Statement of Comprehensive Income
  3. Statement of Changes in Equity
  4. Statement of Cash Flows
  5. Notes in the Financial Statement
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Presents information on the balances of assets, liabilities, and equity at the end of the reporting period.

A

Statement of Financial Position

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Useful to various users of accounting information in assessing the economic resources that an enterprise controls, its financial structure, its liquidity and solvency, and its capacity to adapt to changes in the environment in which it operates.

A

Statement of Financial Position

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Presents the financial performance of an entity during reporting period.

A

Statement of Comprehensive Income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Expanded form of the income statement because it encompasses profit or loss and other comprehensive income.

A

Statement of Comprehensive Income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Helps user assess the entity’s ability to generate cash and the potential changes in economic resources that the enterprise will likely control in the future.

A

Statement of Comprehensive Income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Presents the summarized transactions affecting the balances of equity accounts, such as profit or loss, other comprehensive income, contributions from owners, and distributions to owners.

A

Statement of Changes in Equity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Presents information on the inflows and outflows of cash and cash equivalents during reporting period.

A

Statement of Cash Flows

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Assist users in assessing an entity’s ability to remain solvent and provide returns to investors and creditors.

A

Statement of Cash Flows

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Presents relevant financial information pertaining to the entity’s activities that cannot be presented on the face of the financial statements.

A

Notes to the Financial Statement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

The Notes include a description of the basis of the presentation of financial statements and a summary of significant accounting policies, information required by the PRS or IFRS that is not presented on the face of the financial statements and additional information that will help the users better understand the information presented in any of the financial statements.

A

Notes to the Financial Statement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

That information, along with other information in the _____- , assists users of financial statements in predicting the entity’s future cash flows and, in particular, their timing and certainty

A

notes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

A complete set of financial statements includes:

A
  • a statement of financial position (balance sheet) at the end of the
    period
  • a statement of profit or loss and other comprehensive income for the period (presented as a single statement, or by presenting the
    profit or loss section in a separate statement of profit or loss, immediately followed by a statement presenting comprehensive income beginning with profit or loss)
  • a statement of changes in equity for the period
  • a statement of cash flows for the period
  • notes, comprising a summary of significant accounting policies and other explanatory notes
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

when an entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements, or when it reclassifies items in the financial statements

A

A statement of financial position as at the beginning of the
preceding period

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

may use titles for the statements other than those stated above. All financial statements are required to be presented with equal
prominence.

A

An entity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Reports that are presented outside of the financial statements –including financial reviews by management, environmental reports,
and value added statements, are

A

are outside the scope of IFRSs.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

must “present fairly” the financial position, financial performance and cash flows of an entity.

A

Financial Statement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

requires the faithful representation of the effects of
transactions, other events, and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the Framework.

A

Fair Presentation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

requires an entity whose financial statements comply with IFRSs to make an explicit and unreserved statement of such compliance in the
notes.

A

IAS 1

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

cannot be described as complying with IFRSs
unless they comply with all the requirements of IFRSs (which includes International Financial Reporting Standards, International Accounting
Standards, IFRIC Interpretations and SIC Interpretations).

A

Financial Statement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Inappropriate accounting policies are not _____ either by disclosure of the accounting policies used or by notes or explanatory material.

A

rectified

33
Q

acknowledges that, in extremely rare circumstances,
management may conclude that compliance with an IFRS requirement would be so misleading that it would conflict with the objective of financial statements set out in the Framework.

A

IAS 1

34
Q

In such a case, the entity is required to depart from the IFRS requirement, with detailed disclosure of the ____, _____, and _____ of the departure.

A

nature, reasons, and impact

35
Q

The Conceptual Framework notes that financial statements are normally prepared assuming the entity is a _________ and will continue in operation for the foreseeable future. [Conceptual
Framework, paragraph 4.1]

A

going concern

36
Q

requires management to make an assessment of an entity’s ability to continue as a going concern.

A

IAS 1

37
Q

If management has significant concerns about the entity’s ability to continue as a going concern, the uncertainties must be _________.

A

disclosed

38
Q

If management concludes that the entity is not a going concern, the financial statements should not be prepared on a going concern basis, in which case IAS 1 requires a series of ________.

A

disclosures

39
Q

GENERAL FEATURES OF FINANCIAL STATEMENTS

A
  1. Fair Presentation and Compliance with IFRS/PFRS
  2. Going Concern
  3. Accrual Basis of Accounting
  4. Materiality and Aggregation
  5. Offsetting
  6. Frequency of Reporting
  7. Comparative Information
  8. Consistency of Presentation
40
Q

Requires faithful representation of the effects of transaction, other events, and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income, and expenses set out in the Conceptual Framework.

A

Fair presentation

41
Q

IAS 1 requires that an entity prepare its financial statements, except for
cash flow information, using the accrual basis of accounting. [IAS
1.27]

A

Accrual Basis of Accounting

42
Q

The presentation and classification of items in the financial statements shall be retained from one period to the next unless a change is justified either by a change in circumstances or a requirement of a new IFRS. [IAS 1.45]

A

Consistency of presentation

43
Q

Deducting one item from another of different nature and presenting only the net on the face of the financial statements.

A

Offsetting

44
Q

Assets and liabilities, and income and expenses, may not be offset unless required or permitted by an IFRS. [IAS 1.32]

A

Offsetting

45
Q

Each material class of similar items must be presented separately in the financial statements. Dissimilar items may be aggregated only if they
are individually immaterial. [IAS 1.29]

A

Materiality and Aggregation

46
Q

is provided for narrative and descriptive where it is relevant to understanding the financial statements of the of current period. [IAS 1.38]

A

Comparative information

47
Q

A third statement of financial position is required to be presented if the entity retrospectively applies an accounting policy, restates items, or reclassifies items, and those adjustments had a material effect on the information in the statement of financial position at the beginning of the comparative period. [IAS 1.40A]

A

Comparative information

48
Q
  • The financial statements are prepared at least annually
A

Reporting period

49
Q

If the annual reporting period changes and financial statements are prepared for a different period, the entity must disclose the reason for the change and state that amounts are not entirely comparable. [IAS 1.36] The entity must disclose the following:

A

*Period covered, shorter or longer
*Reason for using a longer or shorter period
*The fact that the amounts presented in the financial statements are not entirely comparable

50
Q

Structure and
content

A

IAS 1 requires an entity to clearly identify: [IAS 1.49-51]
* the financial statements, which must be distinguished from other
information in a published document
* each financial statement and the notes to the financial statements.

In addition, the following information must be displayed prominently, and repeated as necessary: [IAS 1.51]
* the name of the reporting entity and any change in the name
* whether the financial statements are a group of entities or an individual entity
* information about the reporting period
* the presentation currency (as defined by IAS 21 The Effects of
Changes in Foreign Exchange Rates)
* the level of rounding used (e.g. thousands, million

51
Q

Current and non-current classification

A
  • An entity must normally present a classified statement of financial position, separating current and non-current assets and liabilities,
  • When exception applies, presentation of assets and liabilities is based in the order of their liquidity [IAS 1.60]
  • In either case, if an asset (liability) category combines amounts that will be received (settled) after 12 months with assets (liabilities) that will be received (settled) within 12 months, note disclosure is required that separates
  • the longer-term, more than 12-months, amounts
  • the shorter-term, less than 12-month, amounts. [IAS 1.61]
52
Q

assets that are: [IAS 1.66]
* expected to be realized in the entity’s normal operating cycle
* held primarily for the purpose of trading
* expected to be realized within 12 months after the reporting period
* cash and cash equivalents (unless restricted).

A

Current Assets

53
Q

are those: [IAS 1.69]
* expected to be settled within the entity’s normal operating cycle
* held for purpose of trading
* due to be settled within 12 months
* for which the entity does not have the right at the end of the
reporting period to defer settlement beyond 12 months.

A

Current Liabilities

54
Q

When a long-term debt is expected to be refinanced under an existing loan facility, and the entity has the discretion to do so, the debt is classified as ________, even if the liability would otherwise be due within 12 months.

A

non-current

55
Q

However, the liability is classified as ________ if the lender agreed by the reporting date to provide a period of grace ending at least 12 months after the end of the reporting period, within which the entity can rectify the breach and during which the lender cannot demand immediate repayment.

A

non-current

56
Q

(Balance Sheet) Line items

A
  • to be included on the face of the statement are: [IAS 1.54]
    a) property, plant and equipment
    b) investment property
    c) intangible assets
    d) financial assets (excluding amounts shown under (e), (h), and (i))
    e) investments accounted for using the equity method
    f) biological assets
    g) inventories
    h) trade and other receivables
    i) cash and cash equivalents
    j) assets held for sale
    k) trade and other payables
    l) provisions
    m) financial liabilities (excluding amounts shown under (k) and (l))
    n) current tax liabilities and current tax assets, as defined in IAS 12
    o) deferred tax liabilities and deferred tax assets, as defined in IAS 12
    p) liabilities included in disposal groups
    q) non-controlling interests, presented within equity
    r) issued capital and reserves attributable to owners of the parent.
57
Q

Balance Sheet LINE ITEMS:

Further sub-classifications of line items presented are made in the statement or in the notes, for example:

A
  • classes of property, plant and equipment * disaggregation of receivables
  • disaggregation of inventories in accordance with IAS 2 Inventories
  • disaggregation of provisions into employee benefits and other items
  • classes of equity and reserves.
58
Q

(Balance Sheet)
Format

A

IAS 1 does not prescribe the format of the statement of financial
position. * Assets can be presented current then non-current, or vice versa, and
* liabilities and equity can be presented current then non-current then equity, or vice versa.
* A net asset presentation (assets minus liabilities) is allowed. The long-term financing approach used in UK and elsewhere – fixed assets + current assets - short term payables = long term debt plus equity - is also acceptable

59
Q

Balance Sheet FORMAT:

Financial position may be presented as

A
  • Account Form, looks like a T-Account, Assets on the left side,
    Liabilities and Capital on the right side.
  • Report Form, presents Assets, Liabilities and Capital on a continues format. Liabilities after total Assets, Equities after total Liabilities.
  • Financial Position Form, emphasizes the working capital of the entity, in this format, net assets are equal to the equity.
60
Q

Balance Sheet FORMAT:

Share capital and reserves

A
  • Regarding issued share capital and reserves, the following disclosures are required: [IAS 1.79]
  • numbers of shares authorized, issued and fully paid, and issued but not fully paid
  • par value (or that shares do not have a par value)
  • a reconciliation of the number of shares outstanding at the
    beginning and the end of the period
  • description of rights, preferences, and restrictions
  • treasury shares, including shares held by subsidiaries and associates
  • shares reserved for issuance under options and contracts
  • a description of the nature and purpose of each reserve within
    equity
61
Q
  1. The change in equity during a period other than changes resulting from with owners in their capacity as owners. [IAS 1.7]
  2. Includes profit or loss and other comprehensive income
A

Statement of Comprehensive Income

62
Q

the total of income less expenses, excluding the components of other comprehensive income

A

Profit or loss

63
Q

comprising items of income and expense including reclassification adjustments that are not recognized in profit or loss as required or permitted by other IFRSs.

A

Other comprehensive income (OCI)

64
Q

Comprehensive income formula

A

Comprehensive income
for the period = Profit or loss + Other comprehensive income

65
Q
  • Examples of items recognized outside of profit or loss
A
  1. Changes in revaluation surplus where the revaluation method is used under IAS 16 Property, Plant and Equipment and IAS 38 Intangible
    Assets
  2. Remeasurements of a net defined benefit liability or asset recognized in accordance with IAS 19 Employee Benefits (2011)
  3. Exchange differences from translating functional currencies into presentation currency in accordance with IAS 21 The Effects of Changes in Foreign Exchange Rates
  4. Gains and losses on remeasuring available-for-sale financial assets in accordance with IAS 39 Financial Instruments: Recognition and
    Measurement
  5. The effective portion of gains and losses on hedging instruments in a cash flow hedge under IAS 39 or IFRS 9 Financial Instruments
  6. Gains and losses on remeasuring an investment in equity instruments where the entity has elected to present them in other comprehensive income in accordance with IFRS 9
  7. The effects of changes in the credit risk of a financial liability
    designated as at fair value through profit and loss under IFRS 9
66
Q

Statement of Comprehensive Income
(Choice in presentation
and basic requirements)

A
  • An entity has a choice of presenting:
  • a single statement of profit or loss and other comprehensive income, with profit or loss and other comprehensive income presented in two sections,

*two statements which shows:
- a separate statement of profit or loss
- statement of comprehensive income, immediately following the statement of profit or loss and beginning with profit or loss

67
Q

The statement(s) must present:

A
  • profit or loss
  • total other comprehensive income
  • comprehensive income for the period
  • an allocation of profit or loss and comprehensive income for the period
    *between non-controlling interests and owners of the parent
68
Q

Profit or loss section or statement (Minimum Line Items Required)

A

*Revenue
*Gains and losses from derecognition of financial assets at amortized cost
*Finance costs
*Share of profit or loss of associates and joint ventures under equity method
*Gains or losses from reclassification of financial assets
*Tax expense
*Total of discontinued items

69
Q

Profit or loss section or statement (Expense Analysis)

A

*Analyzed either by nature (e.g., raw materials, staffing costs) or by function (e.g., cost of sales, selling)
*If categorized by function, additional information on nature of expenses required (minimum: depreciation, amortization, employee benefits expense)

70
Q

Profit or loss section or statement (Other Comprehensive Income Section)

A

*Items classified by nature, grouped between those reclassified to profit/loss and those not
*Entity’s share of OCI of equity-accounted associates and joint ventures presented in aggregate

71
Q

Profit or loss section or statement (Other Requirements)

A

*Additional line items may be needed for fair presentation of results
*Prohibition against presenting items as ‘extraordinary items’
*Certain items must be disclosed separately if material, including write-downs, restructuring costs, disposals, litigation settlements, and reversals of provisions

72
Q

Statement of Changes in Equity

A

*Separate presentation required

  • Components include:
  • Total comprehensive income (owners vs. non-controlling interests)
  • Effects of retrospective application of accounting policies or restatements
  • Reconciliations for each equity component (profit/loss, other comprehensive income, owner transactions)

Additional items may be on statement or in notes:
- Dividends recognized
- Dividends per share

73
Q

Statement of Cash Flow (IAS 7):

A
  • Basis for assessing cash generation and needs
  • Presentation and disclosure requirements outlined
74
Q

Notes to the Financial Statements (IAS 1.112)

A

*Must present:
- Basis of preparation and specific accounting policies
- Additional IFRS-required information not elsewhere stated
- Relevant additional information

*Systematic presentation, cross-referenced from financial statement face

*Preferred order:
- Compliance statement
- Significant accounting policies summary
- Supporting information for each financial statement item
- Other disclosures (contingent liabilities, financial risk management)

75
Q

Other Disclosures in Financial Statements (Judgements and Key Assumptions)

A

Requirement:
Disclose significant management judgements apart from estimations affecting financial statement amounts.

Examples:
- Determining transfer of risks and rewards of ownership.
- Identifying sales as financing arrangements, not revenue.

Notes: Not disclosing budgets or forecasts.

76
Q

Other Disclosures in Financial Statements (Dividends)

A

Disclosure:
- Proposed/declared dividends not yet recognized.
- Cumulative preference dividends not recognized.

77
Q

Other Disclosures in Financial Statements (Capital Disclosures)

A

Information:
- Objectives, policies, and processes for capital management.
- Qualitative and quantitative data on managed capital.
- Compliance with external capital requirements.
- Consequences of non-compliance.

78
Q

Other Disclosures in Financial Statements (Puttable Financial Instruments)

A

Required Disclosures:
- Summary quantitative data on equity.
- Management’s approach to repurchase/redemption obligations.
- Expected cash outflow on redemption.
- Basis for determining cash outflow.

79
Q

Other Disclosures in Financial Statements (Additional Note Disclosures)

A

Required Details:
- Entity’s domicile, legal form, country of incorporation, and address.
- Description of operations and activities.
- Parent company and ultimate parent if part of a group.
- Information on limited life entity, including lifespan

ConceptuaL Framework and Accounting Standards (4 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions