Published Accounts Flashcards
What are the contents of financial statements in published accounts?
Statement of financial position
Either:
Statement of profit or loss and other comprehensive income, or
A statement of profit or loss plus a statement showing other comprehensive income.
Statement of changes in equity
Statement of cash flows (Cash Flow Statement)
Accounting policies note and other explanatory notes
IAS 1 does not require above titles but use in exam question.
When is departure allowed as fair presentation could mislead?
If management concluded that the financial statements do present fairly the financial position, financial performance and cash flows
That the entity has complied with IASs except departure from IFRS to show fair presentation
Identify the IAS that has been departed from offer:
nature of departure
why misleading
alternative treatment adopted;
Financial impact of the departure on:
net profit/loss
assets/liabilities
equity
cash flows
What is going concern?
Prepare accounts on going concern basis unless intention to liquidate the business or cease trading
Based on assumption entity will continue to trade for the foreseeable future
What is the accruals concept?
IAS 1 – accruals basis for accounts preparation
Accruals accounting versus cash accounting - matching principle
Companies Act also regulates on form of accounts
What is consistency?
Refers to presentation and classification
Examples - accounting period length, measurement
If change, may need to change comparatives
What is materiality and aggregation?
Present separately material classes
Immaterial amounts can be grouped together where they are of a similar nature
Misstatements/omissions – material if could it influence the economic decisions of the users
Materiality: based on size and nature of omission
What is off setting?
general rule not allowable – called off book accounting
Off-set only if an IAS/IFRS specifically allows it
What is comparative information?
always provide prior period information
Exception if IAS/IFRS allows
Unless no prior year available
What are current assets in the statement of finical position?
is expected to be realised in, or is held for resale or consumption in, the normal course of the enterprise’s operating cycle
OR
is held primarily for trading purposes or for the short term and expected realisation within 12 months of reporting period date
OR
is cash or cash equivalent assets which is unrestricted
All other assets classified as non current assets
What are current liabilities in the statement of finical position?
expected to be settled in the normal course of the enterprise’s operating cycle
OR
- is due to be settled within 12 months of the reporting period.
All other liabilities should be classified as non-current liabilities
IAS1 : Disclosure required of assets/liabilities that are expected to be recovered or settled after more than 12 months from the reporting date
What two presentation choices does IAS1 allow for the statements of comprehensive income?
Statement of profit or loss and other comprehensive income
OR
An Statement of Profit or Loss showing the realised profit or loss for the period
plus
Statement showing other comprehensive income
Total comprehensive income = realised profit or loss for period, plus other comprehensive income.
Other comprehensive income = income and expenses not recognised in Profit and loss (i.e. recorded in reserves – for this module includes changes in revaluation surplus)
See pro forma file on VLE for presentation of statements
What is the statement of changes in equity?
Summary of all changes in equity arising from transactions with owners in their capacity as owners
Includes the effect of share issues and dividends.
Reflects the increase or decrease in the net assets of the enterprise in the period
OR
the change in wealth of the enterprise in the period
See pro forma file on VLE for presentation of statements
