Sem 1 Flashcards
What things make up Annual Reports?
Narrative material
Statutory information in Directors’ report
Audited financial data
What are the IAS 1 criteria?
Comply with fundamental accounting principles (accruals, materiality, going concern, consistency)
Disclose accounting policies and apply them consistently (with appropriate notes)
Present a true and fair view of profits, assets and liabilities
What financial data is included in the annual report?
SOFP / Balance sheet
Statement of comprehensive income
Statement of changes in equity
Statement of cash flows for the period
Notes comprising summary of significant accounting policies and other information
What is the minimum amount of information that needs to be presented in the SOCI?
Revenue
Finance costs
Share of profit or loss of associates/joint venture
Tax expense
Post tax profit or loss arising from discontinued operations/revaluation to fair value of relevant assets
Profit or loss (split non-controlling interests and owners of parent)
Other comprehensive income (OCI)
Share of OCI from associates and joint ventures
Total comprehensive income (split as profit or loss)
What is the format for SOCI?
Vertical with costs put into functions e.g. cost of sales, administrative expenses etc
What does cost of sales include?
Direct costs - direct materials purchased, direct labour, subcontracting costs
Overheads - variable and fixed production overheads
Depreciation and amortisation - of non-current assets, impairments
Exceptional amounts written off inventory
What is included in distribution and selling costs?
Warehousing
Promotion
Selling
Transport
What is included in administrative expenses?
Administrative staff salaries
Premises
Professional fees e.g. audit
Trade debtor write-downs
What does the SOCE show?
Total recognised income and expense for a period (separating amounts attributable to equity holders)
For each component of equity, the effect of changes in accounting policies (IAS 8)
Amount of transactions with equity holders in their capacity as equity holders, showing separate contributions to equity holders
For each component of equity, reconciliation between carrying amount at beginning and end of the period
What does the Statement of Cash flow show?
IAS 7 “historical changes in cash and equivalents by means of a cash flow statement which classifies cash flow during period from operating, investing and financing”
Cash - cash in hand and money available on demand (deposits)
Cash equivalents - short term highly liquid investments ready to be converted into cash
Which conditions make group accounts necessary?
When it gains control over another business
What is line-by-line consolidation?
Where you add items from two groups together “line-by-line” i.e. inventory + inventory = consolidated inventory
Journal entry for 100,000 shares with market price of £4 and £1 nominal value?
Dr Cash £400,000
Cr Share capital £100,000
Cr Share premium £100,000
How does the journal account for a bonus issue?
Dr Reserves
Cr Share capital
Cr Share premium
Journal entry for share exchange to acquire a controlling interest in a subsidiary in the company’s individual financial statements?
Dr Investment in subsidiary
Cr Share capital
Cr Share premium
