Weaknesses

Question 1

What is relevance in relation to financial statements?

Answer 1

Information is relevant if it is capable of influencing the decision making of users.

Question 2

What is faithful representation?

Answer 2

A transaction is faithfully represented if it is complete, neutral and free from error.

Question 3

What does comparable mean?

Answer 3

Guidelines provided for any financial element mean that companies prepare financial statements on the same basis and do are comparable. It is also further achieved through disclosure requirements.

Question 4

What is understandability?

Answer 4

Classifying, characterising and presenting information clearly and concisely aids in understandability.

Question 5

What is the purpose of a related party disclosure?

Answer 5

IAS 24 enhances transparency and draws attention to the fact that the entities financial performance and position may be influenced by the Ey range of related parties and by transactions with those parties.

Question 6

What is the process for calculating a he cash consideration on acquisition of a subsidiary in a consolidated cash flow?

Answer 6

Net assets
+ any fair value adjustment.
- non controlling interest.
+ goodwill.
- any share consideration.

Question 7

What are the costs of conversion in relation to inventory production?

Answer 7

1. Costs directly related to production such as materials and overheads.
2. Fixed and visible production overheads.