3.8 Statement of financial position (balance sheet) Flashcards

1
Q

Why is the statement of profit or loss and other comprehensive income useful?

A

It provides a significant indicator of the performance of the entity during the accounting period.

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2
Q

What is the most common measure of performance?

A

Profit

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3
Q

How is total comprehensive income defined?

A

The change in equity during a period resulting from transactions and other events, other than those changes resulting from transactions with owners in the capacity as owners.

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4
Q

What two options does an entity have in presenting its statement of profit and loss under IAS1?

A

1 A single statement of comprehensive income with two sections covering: 1) statement of profit and loss and 2) other comprehensive income or
2 Separate statement of profit or loss followed by a statement of other comprehensive income

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5
Q

According to IAS1, what minimum items must be presented in the profit or loss section:

A

1 revenue
2 finance costs
3 share of profit and losses of associates and joint ventures accounted for using the equity method
4 a single amount for total discontinued operations
5 tax expense
6 a total for profit and loss
7 gains and losses from the de-recognition of financial assets measured at amortized cost

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6
Q

How are items in the “other comprehensive income” section classified?

A

By their nature and according to whether they will be transferred to the profit or loss section in subsequent periods.

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7
Q

What types of items are included in the “other comprehensive income” section?

A

1 changes in revaluation on long term assets
2 gains and losses on remeasurement of defined benefit plans
3 exchange differences from foreign operations
4 gains and losses on financial instruments
5 correction of prior period errors.

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8
Q

What two criteria must a discontinued operation meet under IFRS rules?

A

1 The asset or component must be disposed of or reported as being held for sale
2 The component must be a separate area of the business being removed or sold.

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9
Q

What is the difference between “profit or loss” and “Other comprehensive income”?

A

Profit or loss is the excess of income receivable over expense incurred. Other comprehensive income is all income not recognised in profit or loss.

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