Chapter 3 Flashcards
These are those intended to meet the needs of users who are not in a position to require an entity to prepare reports tailored to their particular information needs. These are referred to as “financial statements”
General Purpose Financial Statement
These are standards and interpretations issued by the International Accounting Standards Board
International Financial Reporting Standards
It is a term used when the entity cannot apply a requirement after making every reasonable effort to do so
Impracticable
This is a type of information that if omitted, misstated or obscured, could reasonably be expected to influence decisions that the primary users of general purpose financial statements make
Material information
This contain information in additional to that presented in the statement of financial position, statement of profit or loss and other comprehensive income and statement of cash flows
Notes
It provides a narrative description or disaggregation of items presented in the financial statements and information about items that do not qualify for recognition in those statements
Notes
It comprises items of income and expense (including reclassification adjustments) that are not recognize in profit or loss as required or permitted by other IFRSS
Other comprehensive income
These holders of instruments classified as equity
Owners
Is the total of income less expenses, excluding the components of other comprehensive income
Profit or loss
These are amounts reclassified to profit or loss in the current period that were recognized in other comprehensive income in the current or previous periods
Reclassified adjustments
Is the change in equity during a period resulting from transactions and other events, other than those changes resulting from, transactions with owners in their capacity as owners
Total comprehensive income
What is the purpose of financial statements
The objective of financial statements is to provide to information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions
What are the information found in the financial statement about an entity
The entity’s assets, liabilities, equity, income and expenses (including gains and losses), contributing by and distributions to owners and cash flows
Enumerate the complete set of financial statement
Statement of financial position, statement of profit or loss and other comprehensive income
Statement of changes in equity
Statement of cash flows
Notes
Additional: comparative information I’m respect of the preceding period and a third statement of financial information when an entity applies a change in accounting policy
What are the general features of financial statement
It must be presented fairly and explicit unreserved statement of IFRS compliance
It is prepared under going concern assumption
Prepared under accrual basis of accounting (except cash flow)
It shall present material class of similar items and present separately items of dissimilar in nature of function unless they are immaterial
Offsetting in not allowed unless required or permitted by an IFRS
At least annual presentation of complete set of financial statement
A minimum of two statements (financial position, profit or loss and other comprehensive income, cash flow, statement of equity) for comparative purposes and
Consistent presentation and classification of items in the financial statements from one period to the next
What are the information to be displayed prominently in the financial statements as required by IAS 1 to clearly identify each FS and the notes
The name of the reporting entity or other means of identification, and any changes in that information from the end of the preceding reporting period
Whether the FS are of an individual entity or a group of entities
The date of the end of the reporting period or the period covered
The presentation currency
The level of rounding used
What are the basis of an assessment for an entity to judge whether an item in financial position shall be presented separately
The nature and liquidity of assets
The function of asset within the entity and the amounts, nature and timing of liabilities
When shall an entity classify assets as current
It expects to realize the asset, or intends to sell or consume it, in its normal operating cycle;
It holds the asset primarily for the purpose of trading;
It expects to realize the asset within twelve months after the reporting period and
The asset is cash or a cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period
It is the time between the acquisition of assets for processing and their realization in cash or cash equivalent
Operating cycle
When shall an entity classify liabilities as current
It expects to settle the liability in its normal operating cycle
It holds the liability primarily for the purpose of trading
The liability is due to he settled within twelve months after the reporting period and
It does not have the right at the end of the reporting period to defer settlement of the liability for at least 12 months after the reporting period
What are the two forms of expense classification in profit or loss
Nature of expense method and function of expense method
What are the information to be presented in the notes
The basis of preparation of the financial statements and the specific accounting policies used;
Information required by IFRSS but is not presented elsewhere in the FS and
Relevant information for better understanding but is not presented elsewhere in the FS
It provides an overview of the financial condition of an entity
Statement of Financial Position or Balance Sheet
It provides information about the entity’s financial performance and management stewardship on a given period
Statement of comprehensive income
