The Statement of Finanacial Position

Question 1

IAS 1

Answer 1

Presentation of financial statements

• Purpose of financial statements
• Complete set of financial statements

Question 2

Complete set as per IAS 1

Answer 2

• Statement of profit or loss and other comprehensive income
• Statement of financial position
• Statement of changes in equity
• Statement of cashflows
• Notes to the financial statements

Question 3

Present Fairly

Answer 3

IAS 1 states that

• Financial statements shall present fairly
• The financial position
• financial performance
• cashflows
• Of an entity

Question 4

Accounting Principles

Answer 4

IAS 1 require compliance with 5 fundamental accounting concepts

• Accruals
• Going Concern
• Consistency
• Offsetting
• Materiality and Aggregation

Question 5

Share Capital

Answer 5

• Equity section of SFP

- Refers to ‘ordinary shares’ of a company

Question 6

Issue of Shares at a premium

Answer 6

• Shares are usually issued at nominal value
• If market value has risen above nominal value, then the company may issue shares at market value
• As this amount is higher than the nominal value
• Needs to be accounted for
• The excess above the nominal value is refered to as ‘issuing shares at premium’

Question 7

Bonus Issue of Shares

Answer 7

• Company give away free or bonus shares to existing shareholders
• Bonus issues is always a proportion to the existing shares held
• 1:2 (one free share for every 2 already held)
• Company doesn’t get money as redistribution of share premium account

Question 8

Rights Issue of Shares

Answer 8

• Company offers shares to existing shareholders
• In proportion the their existing shareholding
• Have to pay for them
• Offered usually below market value
• Will still be above nominal value