1 - Statement of Financial Position & Notes to FS

Question 1

These are formal reports of the financial activities and position of an enterprise, organization, person, or other entity?

Answer 1

Financial statements

Question 2

In what form is relevant financial information presented that presents a company’s financial health?

Answer 2

Structured form

Question 3

What do shareholders use to evaluate the risk and return of their investment in the company and make investment decisions based on their analysis?

Answer 3

Financial statements

Question 4

Who also uses the financial statements to assess the viability of investing in a company?

Answer 4

Prospective investors

Question 5

Who needs financial statements in making informed decisions on providing credit to entities?

Answer 5

Creditors and suppliers

Question 6

Who also uses them as tools to communicate the past performance of and future expectations from the company?

Answer 6

management

Question 7

What is the basis of the presentation of financial statements in accordance with International Accounting Standards (IAS) 1?

Answer 7

(a) Components of financial statements(including SOFP as the beg. of the prior period that is required when an entity restates its comparative prior period fs)
(b) General features for the presentation of fs &
(c) Identification of fs

Question 8

It is also called the statement of financial condition or the balance sheet?

Answer 8

Statement of financial position

Question 9

What do you call the summary of an entity’s economic resources (assets), economic obligations (liabilities), and equity and their relationships to each other at a moment in time, which is the end of the reporting period?

Answer 9

SOFP

Question 10

What is the detailed expression of the basic accounting equation?

Answer 10

Asset = liabilities + equity

Question 11

The Statement of financial positions tells us about the firms?

Answer 11

(1) Economic resources,
(2) financial structure,
(3) liquidity,
(4) solvency, and
(5) it’s capacity(to adapt to changes in the environment in which it operates)

Question 12

What consists of the financial position of an enterprise?

Answer 12

Assets, liabilities, and equity

Question 13

They define an asset as a present economic resource controlled by an entity as a result of past events?

Answer 13

The IASB’s and FRSC’s Conceptual Framework

Question 14

What do you call the resources that are controlled by the enterprise as a result of past events and from which future economic benefits are expected to flow to the enterprise?

Answer 14

assets

Question 15

What do you call a right that has the potential to produce economic benefits?

Answer 15

Economic resource

Question 16

What rights are embodied in an asset that may correspond to an obligation of another party?

Answer 16

(a) rights to receive cash, goods or services

(b) right to exchange economic resources

Question 17

What are the rights that do not correspond to an obligation of another party?

Answer 17

(a) right to use PPE, (b) right to sell inventories (c) rights to use intellectual property

Question 18

It derives its value from a present potential to produce future economic benefits?

Answer 18

asset

Question 19

In what following ways may assets flow to the entity?

Answer 19

(a) receiving cash or economic resource
(b) exchanging resource
(c) using the resource to produce good/service or enhance another asset
(d) allow others to use resource
(e) selling resources
(f) extinguishing liabilities
(g) distribute the resources to owners

Question 20

What is a present obligation of an entity to transfer an economic resource as a result of past events?

Answer 20

Liabilities

Question 21

What do you call the present obligations of the enterprise arising from past events, the settlement of which is expected to result in an outflow from the enterprise of resources embodying economic benefits?

Answer 21

liabilities

Question 22

What are liabilities’ essential characteristics?

Answer 22

(a) the obligation of an entity
(b) obligation to transfer an economic resource
(c) present obligation arises from a past event

Question 23

What do you call if the entity must not have an ability to avoid the obligation, which is a duty or a responsibility?

Answer 23

Obligation of an entity

Question 24

What do you call that may be settled in the future by paying cash, delivering goods, providing services, exchanging economic resources on unfavorable terms(onerous), creating another obligation in replacement of the old, or issuing a financial instrument equivalent to ownership interest?

Answer 24

An obligation is to transfer an economic resource

Question 25

In a past transaction, the entity has obtained economic benefits or taken action that obliges it to transfer an economic resource?

Answer 25

The present obligation arises from a past event

Question 26

What is a term that broadly encompasses the capital of any form of business organization?

Answer 26

equity

Question 27

What do you call the residual interest in the assets of the entity after deducting all of its liabilities?

Answer 27

Net assets

Question 28

In a corporation, net assets are referred to as?

Answer 28

Stockholders’ equity or shareholders’ equity

Question 29

What are the components of the shareholders’ equity that are presented in the statement of financial position?

Answer 29

Share capital, share premium (or additional paid-in capital), accumulated profits (or retained earnings), or cumulative OCI.

Question 30

What should an entity disclose, either on the face of the statement of financial position or statement of changes in equity or in notes?

Answer 30

(a) each class of share capital | (b) description of nature and purpose of each reserve within equity

Question 31

It is the actual intentions of the parties to a transaction?

Answer 31

Substance

Question 32

Is the legal aspect of the legal document evidencing the transaction?

Answer 32

form

Question 33

NORMALLY, the legal form of the transaction agrees with the ___?

Answer 33

Economic substance

Question 34

What are others following that shall be considered in deciding whether additional line items shall be presented?

Answer 34

(a) nature & liquidity of assets (b) functions of assets within the entity (c) amounts, nature, and timing of liabilities

Question 35

In the general requirement of IAS 1, in what way the assets and liabilities should be classified?

Answer 35

Current and noncurrent

Question 36

The presentation on liquidity can also be used when the enterprise assesses that the presentation will become ___?

Answer 36

more reliable and relevant to the users

Question 37

What is the classification of an entity for current assets?

Answer 37

(a) It expects to realize the asset, or intends to sell or consume it, in its normal operating cycle; (b) It holds the asset for the purpose of trading; (c) It expects to realize the asset within 12 months after the reporting period (d) The asset is cash or cash equivalent, unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

Question 38

What is the time between the acquisition of assets for processing and their realization in cash or cash equivalents?

Answer 38

Normal operating cycle

Question 39

What type of entity is the length of time to complete the following processes: purchase of materials, production of goods, sales of goods, and collection from customers?

Answer 39

Manufacturing entity

Question 40

What type of entity is the time required to complete purchase of goods, sales of goods and collection from customers?

Answer 40

merchandising

Question 41

What type of entity is the normal operation consisting only of providing services and collection from customers?

Answer 41

Service entity

Question 42

The duration of the normal operating cycle is presumed to be?

Answer 42

12 months

Question 43

They are intended to meet the working capital requirements of the enterprise and classified as assets?

Answer 43

Financial assets at fair value through profit or loss (FVPL)

Question 44

The category of non-current assets includes?

Answer 44

Tangible, intangible, operating, and financial assets of a long-term nature

Question 45

This includes all tangible assets with an estimated useful life of beyond one year, that are held for rental to others, for production of goods and services, and/or for administrative purposes?

Answer 45

Property, plant and equipment

Question 46

These are assets used in the ordinary course of business?

Answer 46

PPE

Question 47

It is a property (land or a building - or part of a building or both) held (by the owner of by the lessee under a finance lease) to earn rentals or for capital appreciation, or both rather than for use in the production or supply of goods or services or for administrative purposes, or sale in the ordinary course of the business.

Answer 47

Investment property

Question 48

This refer to an investment in equity securities of another enterprise that provides the investor significant influence over the investee?

Answer 48

Investment in associates

Question 49

The purpose of such investments is other than for trading and the holding does not the intend to dispose of the investment within twelve month from the date of acquisition?

Answer 49

Investment in associates

Question 50

What do you call results from inter-period tax allocation and is recognized for deductible temporary differences between book basis and tax basis of certain assets and liabilities?

Answer 50

Deferred Tax Asset

Question 51

These are set off against deferred tax liabilities and the net is presented on the statement of financial position if, and only if there is a valid basis for offsetting?

Answer 51

Deferred Tax Asset

Question 52

They arise from taxes imposed by only one taxing authority?

Answer 52

deferred tax asset and deferred tax liabilities

Question 53

What are financial assets?

Answer 53

(a) Cash (b) contractual right to receive cash or other financial assets from another enterprise (c) contractual right to exchange financial instruments with another enterprise under conditions that are potentially favorable (d) equity instrument of another enterprise

Question 54

What are the identifiable non-monetary assets, without physical substance, controlled by the enterprise, and provide the enterprise some rights, privileges, and competitive advantages?

Answer 54

intangible assets

Question 55

What are typical examples of intangible assets?

Answer 55

Patents, copyrights, trademarks and franchises.

Question 56

What do you think which arises from business combination and is measured as the excess of the purchase price paid by the acquiring company over the fair value of net identifiable assets of the purchased entity?

Answer 56

goodwill

Question 57

It is generally shown in a separate line presentation to segregate those intangibles that do not meet criterion of identifiability?

Answer 57

goodwill

Question 58

These are living animals and plants held by the company engaged in raising livestock, forestry, cropping, cultivating orchards and plantation, floriculture, or aquaculture?

Answer 58

Biological assets

Question 59

Examples of biological assets and agricultural produce?

Answer 59

Sheep is a biological asset, while wool is agricultural produce; vines are biological assets while grapes are agricultural produce

Question 60

What are the classifications of current liabilities?

Answer 60

- Expected to settle in the entity’s normal operating cycle - Purpose of trading - Settled within 12 months after reporting period - Does not have an unconditional right to defer settlement of the liability for at least 12 months after 12 reporting period

Question 61

How do you classify obligations related to the normal conduct of the entity’s central revenue producing activities?

Answer 61

Current liabilities

Question 62

Why are other obligations not part of the normal operating cycle but are still classified as current liabilities?

Answer 62

Because they are due for settlement within 12 months of the end of the reporting period OR for the purpose of traded

Question 63

What do you call long-term liability maturing within twelve months from the reporting date?

Answer 63

Current liabilities

Question 64

How do you classify at the reporting date the entity that has the discretion to refinance or roll over the obligation for at least 12 months after the reporting period under an existing loan facility?

Answer 64

Non-current liabilities

Question 65

It takes the form of either extending the maturity date or entering into a borrowing transaction with the same lender, proceeds of which will be used to settle the maturing obligation?

Answer 65

refinancing

Question 66

The currently maturing obligation shall be reported as non-current only if the agreement to refinance is completed ___?

Answer 66

On or before the reporting date

Question 67

If the agreement to refinance is completed after the reporting period, even before the issuance of the financial statement, the maturing obligation shall be classified as? And why?

Answer 67

Current, because as of the end of the reporting date, the enterprise does not have the right to defer the settlement of liability.

Question 68

If an entity expects, and has the discretion, to refinance or roll over an obligation for more than twelve months after the reporting date under an existing loan facility, it classifies as?

Answer 68

Non-current, even if it would be due within short period

Question 69

What is the classification when an entity breaches an undertaking under a long-term loan agreement on or before the reporting date with the effect that the liability becomes payable on demand, the liability is classified as?

Answer 69

Current, even if the lender has agreed, for issue not to demand payment as a consequence of the breach

Question 70

What is the classification if the lender agreed at or before the reporting date to provide a grace period ending at least 12 months from that date, within which the entity can rectify the breach and during which the lender cannot demand immediate payment?

Answer 70

Non current

Question 71

The following are the events disclosed as non-adjusting events in the notes to the financial statements?

Answer 71

(a) refinancing on long-term basis (b) rectification of a breach of long-term loan arrangement (c) rectify a breach of a long-term loan arrangement ending at least 12 months after reporting period

Question 72

Where should the liability that has been excluded from current liabilities as a result of refinancing should be described and disclosed?

Answer 72

Notes to the financial statements

Question 73

The general rule for the presentation of assets and liabilities on the face of the financial statements is to classify them into?

Answer 73

Current and noncurrent

Question 74

An exception is when the enterprise believes that presentation based on liquidity provides information that is more?

Answer 74

More reliable and more relevant

Question 75

What are the two methods adapted for the presentation of asset and liabilities under IAS 1 that requires for each asset and liability?

Answer 75

(1) amounts expected to be received or settled within 12 months from the reporting date (2) amounts expected to be received or settled more than 12 months after the reporting date

Question 76

What is the judgment on whether additional items are presented separately based on the assessment of?

Answer 76

(a) nature and liquidity of assets (b) function of assets within the entity (c) amounts, nature and timing liabilities

Question 77

What are the three known forms of presenting the statement of financial position?

Answer 77

Report form, account form, or financial position form?

Question 78

What kind of form where assets, liabilities, and equity are shown in that order in a vertical manner, which is followed by liabilities and equity are immediately followed below by asset presentation?

Answer 78

Report form

Question 79

This form allows a T-account format where assets are shown on the left side, while liabilities and equity are shown on the right side of the statement of financial position?

Answer 79

Account form

Question 80

This form emphasized the working capital position of an enterprise?

Answer 80

Financial position form

Question 81

This a form presented in vertical form, the current liabilities are deducted from current assets to derive working capital?

Answer 81

Financial position form

Question 82

What do you classify the events after the reporting period?

Answer 82

(1) adjusting events after the reporting period | (2) non-adjusting events after the reporting period

Question 83

Since all of the relevant financial information pertaining to a company’s activities cannot be disclosed directly on the face of the financial statements, additional disclosed are made in accompanying notes, the notes shall:

Answer 83

(a) Present information about the basis of preparation of the financial statements and the specific accounting policies used (b) Disclosed the information by IFRS that is not presented on the face of the SOFP, SOCI, SOCE or SOCF Provide additional information that is not presented on the face of the financial statements, but is relevant to an understanding of any of them

Question 84

The notes shall be arranged in?

Answer 84

Logical sequence, cross referenced and properly numbered

Question 85

What are the orders normally presented for notes, which assists users in understanding the financial statements and comparing them with financial statements of other entities?

Answer 85

(1) Statement of compliance with IFRS (2) Summary of significant accounting policies applied (3) Supporting information for items presented on the face if the SOFP,SOCI SOCE, & SOCF in the order which each statement and each line item is presented (4) Other disclosures, including: a. Contingent liabilities, and unrecognized contractual commitments b. Non-financial disclosures