Module 1: The Financial Reporting Environment (Part 2) Flashcards
(146 cards)
1
Q
A principles-based system of accounting is a system which is based on a _________ _________
A
conceptual framework;
2
Q
A rules-based system requires preparers to understand and apply ________ _____ to report specific transactions
A
detailed rules;
3
Q
In practice, most standard setting bodies, including the IASB have developed or adopted standards that are a mixture of _________ and _____
A
principles; rules;
4
Q
Rules-based accounting standards often need to contain complex _________ and scope __________.
As a result, accounting standards and guidance can be ___________.
A
definitions; exceptions;
voluminous;
5
Q
Advantages of a rules-based system:
- Increases __________ of financial statements
- Reduces _______ of __________ required in financial statements
- Suitable for _____, _______ economies (eg. US)
- Preparers do not need to make __________ and thus risk consequences
A
comparability;
volume; explanation;
large, complex;
judgements;
6
Q
Principles-based accounting standards are:
- Likely to be less ______ and ______ than rules-based standards
- Contain explicit requirements to show a ____ and ____ view of financial performance
- Requires very ____ ________ of information about the nature of transactions
A
length; complex;
true; fair;
full disclosure;
7
Q
In practice, principles-based standards often need to be accompanied or supported by explanatory _______, illustrative _______, and _____________
A
material; examples; interpretations;
8
Q
Advantages of a principles-based system:
- More likely to show a ____ and ____ view of a company’s financial statements
- Encourages __________ __________
- Less open to ‘c______ a________’ abuses as principles are harder to evade
- More _______ than a system of rules and thus easier to use in times of change
A
true; fair;
professional judgement;
creative accounting;
flexible;
9
Q
Accounting Standards are ___________ statements of how particular types of ___________ and other ______ should be reflected in the financial statements
A
authoritative; transactions; events;
10
Q
- One of the stated purposes of the IASB’s Conceptual Framework is to assist in applying IFRS.
- Where there is no accounting standard covering a particular transaction, the Conceptual Framework can be used to assist in _________ an _________ __________ treatment
A
developing; appropriate accounting;
11
Q
IAS1 Presentation of Financial Statements explains that:
- Fair presentation requires the ________ ___________ of the effects of transactions
- Compliance with _ _ _ _ is presumed to result in financial statements that achieve a ____ presentation
A
faithful representation;
IFRS; fair;
12
Q
Further points from IAS1:
- If an entity has _______ with _ _ _ _ , it should disclose that fact in its financial statements
- All relevant _ _ _ _ must be followed if compliance with IFRS is disclosed
- Use of an i__________ accounting ________ cannot be rectified either by disclosure of accounting policies or notes/explanatory material
A
complied; IFRS;
IFRS;
inappropriate; treatment;
13
Q
The requirement to ‘present fairly’ also applies to transactions which are ___ _________ by a specific accounting standard
A
not covered;
14
Q
Fair presentation requires an entity to:
- Select and apply appropriate accounting ________
- P_____ i_________ in a manner that results in relevant, reliable, comparable and understandable information; and
- Provide a________ d_______ where necessary to enable users to understand the impact of particular transactions
A
policies;
Present information;
additional disclosures;
15
Q
IAS1 states that ________ (explanatory material or notes) does not rectify ____________ accounting policies
A
disclosure; inappropriate;
16
Q
It is sometimes argued that having accounting standards actually _______ the quality of financial reporting
A
reduces;
17
Q
Advantages of accounting standards:
- Reduces or eliminates confusing ________ in accounting methods, thus increasing ____________
- It is harder to deliberately mislead _____
- Provides ________ to preparers of financial statements
- More ____________
- Improved _______ of information
- Provides focal point for _____ and ________ about accounting practice
- Means of reaching a _______ about the way items should be treated
- Less ______ alternative than legislation
- Improves ________ of financial reporting
A
variations; usefulness;
users;
guidance;
understandable;
quality;
debate; discussions;
consensus;
rigid;
credibility;
18
Q
Disadvantages of accounting standards:
- May not be _________ for all entities
- Development of accounting standards is a ________ process and may be affected by l______ or g_________ pressure
- C___ of c________ may outweigh the benefits
- Some preparers may see the standards as a set of rules that they can _____ through ‘c_____ a_______’
- May be r_____ and not f_______
- Requires extensive _________, making financial statements harder to __________
- May have unforeseen e________ consequences for entities who apply them; may affect the c________ decisions taken by management
A
appropriate;
political; lobbying; government;
Cost; compliance;
evade; ‘creative accounting’;
rigid; flexible;
disclosure; understand;
economic; commercial;
19
Q
The entity is normally viewed as a _____ ______; that is, continuing in operation for the foreseeable future
It is the main underlying assumption stated in the C_______ F_________
A
going concern;
Conceptual Framework;
20
Q
The going concern concept assumes that:
- The business will continue to operate for the ________ _____ (at least the next _ _ months)
A
foreseeable future; 12;
21
Q
The main significance of a business being a going concern is that:
1) Assets should ___ be measured at their ‘_____-__’ value
2) Liabilities are classified as _______ or ___-_______ depending on when they are due to be settled
A
not; break-up;
current; non-current;
22
Q
Q12) Going Concern p68 of study guide
A
see textbook
23
Q
If the going concern assumption is not followed, that fact must be disclosed, together with:
- The basis on which the financial statements have been ________
- The reasons why the entity is not considered to be a _____ _______
A
prepared;
going concern;
24
Q
In the accruals basis of accounting, items are recognised as a_____, l__________, e_____, i_____ and e________ when they satisfy the definitions and recognition criteria for those elements in the ________ __________
A
assets, liabilities, equity, income; expenses;
Conceptual Framework;
25
Financial statements should be prepared when revenues or expenses are ______ or _________ in the accounting period to which they relate
earned; incurred;
26
In computing profit, revenue earned must be ________ against the expenditure incurred in earning it.
This is also known as the m_______ c_________
matched;
Matching Convention;
27
Faithful representation of a transaction is only possible if it is accounted for according to its _________ and _______ reality, not solely based on its _____ form
substance; economic; legal;
28
Substance over form: The principle that transactions and other events are accounted for and presented in accordance with their _________ and _________ reality and not merely their _____ form
substance; economic; legal;
29
An example of substance over form is found in __________ for ______
accounting; leases;
30
- In a lease, the lessee never obtains legal title to the asset and so does not ___ the asset
- However they have all the risks and rewards of ownership, and must bear the costs of ownership such as ________ and ___________.
- Hence, the asset is ____________ in the lessee's accounts and treated as an owned asset, following the substance of transaction.
- This helps show the ____ financial position of the entity
own;
insurance; maintenance;
capitalised;
true;
31
The two fundamental qualitative characteristics:
- ___________
- _______ ___________
Information must possess both these characteristics in order to be ______
Relevance;
Faithful Representation;
useful;
32
The four enhancing qualitative characteristics are:
- C__________
- V__________
- T__________
- U__________
These qualities enhance the __________ of financial information
Comparability;
Verifiability;
Timeliness;
Understandability;
usefulness;
33
Relevant financial information is capable of making a __________ in the decisions made by users
difference;
34
Information on financial position and performance is often used to _______ future position and performance
predict;
35
The relevance of information is affected by its __________
materiality;
36
Materiality
Information is material if omitting it or misstating it could ________ decisions that users make on the basis of financial information about a specific reporting entity.
influence;
37
To be useful, financial information must faithfully represent the ________ events that it purports to ________.
The user must be able to depend on it being a f______ r___________
economic; represent;
faithful representation;
38
A faithful representation is:
- c______
- n______
- free from e_____
complete;
neutral;
error;
39
A neutral depiction is without ____ in the ________ or __________ of financial information
bias; selection; presentation;
40
Free from error means there are no ______ or _________ in the description of the phenomenon and no ______ made in the process by which the financial information was produced.
errors; omissions;
errors;
41
Neutrality is supported by the concept of _________
P_______ is the exercise of caution particularly where _________ and ___________ are required
prudence;
Prudence; estimates; judgements;
42
- The disclosure of accounting policies helps support ____________
- Comparability is not the same as ___________
- Corresponding information for __________ periods should be shown to enable comparisons over time
comparability;
uniformity;
preceding;
43
Verifiability
Means that different knowledgeable and ___________ observers could reach __________ that a particular depiction is a faithful representation
independent; consensus;
44
Timeliness
Generally the _____ the information, the ____ useful it is
older; less;
45
Information is made understandable by c_______, c__________ and p________ information clearly and concisely
classifying, characterising; presenting;
46
IFRS Practice Statement 2 M_____ M__________ J_________ was issued in ___________ _ _ _ _
Making Materiality Judgements; September 2017;
47
The aim of the IASB in issuing Practice Statement 2 is to encourage greater application of __________ in the preparation of financial statements.
The guidance is not __________
Practice Statement 2 was developed in response to concerns that some companies were unsure how to make __________ _____________
judgement;
mandatory;
materiality judgements;
48
Materiality is an entity-specific aspect of relevance based on the ______ or _________, or both, of the items to which the information relates
nature; magnitude;
49
Materiality judgements
Recognition and measurement:
- Only needs to be applied when the ______ of applying them is _______
- Eg. an entity may choose to capitalise items of PP&E when the cost of an individual item exceeds $2k, on the basis that capitalising items below this amount will not have a ________ effect on the financial statements
effect; material; material;
50
Materiality judgements
Presentation and disclosure:
- If the information provided by a certain disclosure requirement is ___ _______, the entity does not need to make that ________
not material; disclosure;
51
Financial statements provide information to primary users:
- Primary users include i_______, l_______ and other c_______, both _______ and _________
- General purpose financial statements cannot meet ___ of the information needs of primary users
- The entity is ___ required to meet the information needs of other __________, or the individual requirements of _________ primary users
investors, lenders; creditors; existing; potential;
all; not; stakeholders; particular;
52
Making materiality judgements: 4-step process
1) I________ potentially material information
2) A_____ materiality of information
3) O_______ clearly and concisely in draft financial statements
4) R_____ complete set of draft financial statements
Identify;
Assess;
Organise;
Review;
53
Materiality factors (that can help assess whether information is material)
Quantitative factors:
- Consider any ___________ items (eg. contingent liabilities) that could affect primary users' ________
unrecognised; perception;
54
Materiality factors (that can help assess whether information is material)
Qualitative factors (Internal):
- Involvement of r______ p______
- U________ features
- U________ changes in trends
Qualitative factors (External):
- G________ location
- I_______ section
- S____ of the e_______
related parties;
Uncommon;
Unexpected;
Geographic;
Industry;
State; economy;
55
In assessing materiality, both ____________ and __________ factors should be considered
quantitative; qualitative;
56
Quantitative factors can be assessed with the help of a ___________ (eg. 5% of profit)
threshold;
57
It is usually more _______ to assess items from a __________ perspective
efficient; quantitative;
58
If an item is considered immaterial on the basis of the q_________ t_________, qualitative factors should then be considered.
The presence of a qualitative factor in a transaction/event, such as the involvement of a related party, ______ the q__________ t________
quantitative threshold;
lowers; quantitative threshold;
59
- The presence of qualitative factors does not mean that information is always ________
- Entities may decide that despite the qualitative factors, the effect of them is so _____ that it could not reasonable be expected to ________ primary users' __________
material;
small; influence; decisions;
60
Worked example p75 of study guide
See textbook
61
IFRS are not intended to be applied to ___________ items
immaterial;
62
Historically:
- One accounting treatment was designated as the __________ treatment (the ________ treatment)
- The other was known as the _________ treatment
benchmark; preferred;
alternative;
63
IAS16 allows Property, Plant & Equipment to be carried at ____ or _________ amount
cost; revalued;
64
When the IFRS Interpretations Committee issue additional guidance on the application of an accounting standard, this additional guidance is called an _ _ _ _ _
As of October 2016, there are currently _ _ different _ _ _ _ _s
IFRIC;
23; IFRIC;
65
Departure from _ _ _ _ is not allowed in Australia
In Australia, preparers of financial statements are not permitted to ______ from any of the requirements of ________ ________
Instead, the financial statements must disclose __________ information
IFRS;
depart; accounting standards;
additional;
66
Extreme case disclosures (1)
In very rare circumstances, management may conclude that compliance with a requirement in a ________ or ___________ may be so misleading that it would conflict with the _________ of financial statements set out in the C_______ F_________
Standard; Interpretation; objective; Conceptual Framework;
67
Extreme case disclosures (2)
IAS1 states that in such cases the entity needs to disclose the following:
- The _____ of the Standard, the ______ of the requirement and the ________ why management has reached its conclusions; and
- For each period, the ___________ to each item in the financial statements that would be necessary to achieve ____ presentation
title; nature; reason;
adjustment; fair;
68
In Europe, consolidated financial statements are prepared in accordance with:
- N_______ requirements
- E________ C_________ directives
- _ _ _ _
National;
European Commission;
IFRS;
69
- The AASB adopted _ _ _ _ from _ ________ _ _ _ _
- And so all general purpose financial reports prepared by for-profit entities prepared in accordance with _ _ _ _ are also in accordance with _ _ _ _
IFRS; 1 January 2005;
AASB; IFRS;
70
In _ _ _ _, China officially released a new set of C_____ A_______ S_______ which are substantially converged with _ _ _ _
2006; Chinese Accounting Standards; IFRS;
71
In _ _ _ _, the IASB and the A__________ S_________ B______ of Japan announced a joint project to reduce differences between _ _ _ _s and Japanese accounting standards
2005; Accounting Standards Board;
IFRS;
72
Over the last 10 years, the US authorities have moved significantly closer to recognising _ _ _ _, although it is unlikely that the US will adopt _ _ _ _ in the near future
IFRS; IFRS;
73
A 2009 AASB publication IFRS Adoption in Australia summarised the outcomes of the change to IFRS from 2005. The benefits have been:
- Financial reports are more readily __________ worldwide
- Synergies in p_______, a_____ and a_______ of Australian financial reports
- Improved reporting of financial ____________
understood;
preparation, audit; analysis;
instruments;
74
A 2009 AASB publication IFRS Adoption in Australia summarised the outcomes of the change to IFRS from 2005. The disadvantages are:
- Initial costs of _________
- The ____ of change
- Accounting and reporting issues that are important to ___________ companies are not a priority for the _ _ _ _
adoption;
pace;
Australian; IASB;
75
International standards have to be perceived as at least as good as, or preferably better than, the ________ _ _ _ _ that they replace, otherwise they will not be accepted by the world's _______ ______ __________
national GAAP;
major stock exchanges;
76
The International Organisation of Securities Commissions (IOSCO) is the representative of the world's s_______ m______ r__________
securities market regulators;
77
Differences in the quality of accounting ______ and their __________ between countries leads to __________ between markets
policies; enforcement; inefficiencies;
78
Developing countries are __________ of the _ _ _ _, believing it to be dominated by the _ _
suspicious; IASB; US;
79
Developing countries have been catered for to some extent by the issue of a Standard on _________, which is generally of much more relevance to such countries
agriculture;
80
- There are tensions between the _ _ / _ _ model of financial reporting and the __________ model
= The _ _ / _ _ model is based around ________ reporting, whereas the _________ model is mainly concerned with ___ rules
UK/US; European;
UK/US; investor; European; tax;
81
- IFRS in European countries requires listed companies to adopt standards that have been endorsed by the E________ F________ R________ A______ G_____ (EFRAG)
- Many have feared that this might lead to EFRAG effectively becoming a European _______-______ body and that eventually Europe might adopt its own variant of _ _ _ _
- This has not happened
European Financial Reporting Advisory Group;
standard-setting; IFRS;
82
- Many argue that the _ _ _ _ contributed to the g____ f________ c____ of 2008 by requiring financial assets to be measured at ____ value
IASB; global financial crisis; fair;
83
How has the IASB responded to political criticism?
- A Monitoring Board has been set up to provide a ______ ____ between the ________ and _______ _______ authorities
- The __________ of the IASB board has changed
- Public consultation on the IASB's technical agenda has been introduced every _ years
- Accelerated due process has been introduced for use in __________ circumstances
formal link; Trustees; capital market;
composition;
3;
exceptional;
84
The European Commission is uniquely the only organisation to:
- Produce ____________ standards of accounting practice that are _______ enforceable, in the form of directives that must be included in the national legislation of member states
international; legally;
85
The EC adopted regulation stating that:
- From _ _ _ _, consolidated accounts of ______ _________ are required to comply with _ _ _ _
2005; listed companies; IFRS;
86
In 2004 the IASB and FASB agreed to develop a _______ _________ _________ which would be a significant step towards harmonisation of future standards
common conceptual framework;
87
National standard-setters are often involved in the development of D_________ P_____ and E_______ D____ on new areas
Discussion Papers; Exposure Drafts;
88
The purpose of the Accounting Standards Advisory Forum (ASAF) is:
- To provide technical _____ and _______ to the _ _ _ _
advice; feedback; IASB;
89
- Transactions and other events are grouped together in broad _______ and in this way their financial effects are shown in the financial statements.
- These broad classes are the _______ of financial statements
classes;
elements;
90
An Asset is:
- A _______ economic resource,
- ________ by the entity
- As a result of ___ events
present;
Controlled;
past;
91
A liability is:
- A ______ obligation of the entity, to
- T_____ an economic resource
- As a result of ____ events
present;
transfer;
past;
92
Equity is the residual _______ in the _______ of an entity after deducting all its ___________
interest; assets; liabilities;
93
Whether an item satisfies the criteria for an asset, liability or equity will depend on the ________ and economic _______ of the transaction, not its legal form
substance; reality;
94
An economic resource is a _____ that has the potential to produce economic benefits
It is only necessary that the economic resource already ______ and that there is at least one circumstance in which it would ______ economic benefits
right;
exists; produce;
95
An entity controls an economic resource if:
- It can ______ the use of the resource
- It _______ economic benefits that flow from it; and
- It can ______ other entities from doing this
direct;
obtains;
prevent;
96
The existence of an asset, particularly in terms of control, is not reliant on:
- P_______ form; nor
- L____ rights
Physical;
Legal;
97
- Transactions or events in the ____ give rise to _____
- Those expected to occur in the ______ do not give rise to _____
past; assets;
future; assets;
98
An essential characteristic of a liability is that the entity has a present _________
obligation;
99
The difference between a present obligation and a future commitment is:
- A management decision to purchase assets in the future, does not in itself give rise to a _______ _________
- An obligation is something that _______ be _________
present obligation;
cannot; avoided;
100
Settlement of a present obligation will involve _______ of an economic resource in order to satisfy the _____ of the other _____
transfer; claim; party;
101
Liabilities must arise from ____ ___________ or ______
past transactions; events;
102
The amount shown for equity depends on the measurement of _____ and ___________
assets; liabilities;
103
Income is the increases in ______, or decreases in ________, that result in _________ in ______, other than those relating to contributions from ______ participants
assets; liabilities; increases; equity; equity;
104
Expenses are the decreases in ______, or increases in _________, that result in ________ in ______, other than those relating to distributions to ______ participants
assets; liabilities; decreases; equity; equity;
105
Both ______ and _____ are included in the definition of income.
R_______ arises in the course of ordinary activities of an entity.
revenue; gains;
Revenue;
106
Gains include those arising on disposal of ___-_______ assets.
The definition of income also includes __________ gains, eg. on revaluation of _______ __________
non-current;
unrealised;
market securities;
107
As with income, the definition of expenses includes _______ as well as those expenses that arise in the course of ordinary activities of an entity.
losses
108
Losses will include those arising on the disposal of ___-_______ assets.
The definition of expenses will also include _________ losses eg. downward ___________ of property.
non-current;
unrealised;
revaluation;
109
Capital maintenance adjustments:
- The ____________ or ___________ of assets and liabilities gives rise to ________ or ________ in equity
revaluation; restatement;
increases; decreases;
110
- The gain or loss is ___ _______ in an entity's profit or loss for the year under certain concepts of _______ maintenance.
- Instead it is shown as o_____ c__________ i_______
not included; capital;
other comprehensive income;
111
Elements should be recognised if it is _______ and will provide users of the financial statements with a _______ ____________ of the transactions of the entity
relevant;
faithful representation;
112
- The cost or value of an item, in many cases, must be ___________
- This gives rise to ___________ uncertainty.
- The Conceptual Framework states that the use of reasonable __________ is an essential part of the preparation of financial statements and does not undermine their reliability.
estimated;
measurement;
estimates;
113
A provision is a _________ of uncertain _________ and ______
liability; timing; amount;
114
What is the basic accounting equation?
ASSETS - LIABILITIES = EQUITY
115
The difference between equity and liabilities is that:
- For there to be a liability, there must be an __________: an outflow of economic benefits that ________ be realistically _________
obligation; cannot; avoided;
116
- Debt finance is a _________ of the company.
- The company will eventually have an _________ to _____ the amount.
- In almost all cases, the company also has an _________ to pay _______ on its debt, regardless of the amount of the entity's profits or losses.
liability;
obligation; repay;
obligation; interest;
117
- Share capital gives their holders the right to _____ in the company's _____ and ______, and
- To _________ the policies adopted by __________ by exercising voting rights.
- They are ________ to the _____ and uncertainties of the business.
- The ______ on __________ depends on the company's results.
share; profit; losses;
influence; management;
exposed; risks;
return; investment;
118
Q16 P93 study guide
- The preference shares are a ___-________ _________
- The liability exists because the company has an _________ to pay _______ over the life of the _______ and eventually repay the principal amount
non-current liability;
obligation; interest; shares;
119
INCOME occurs when:
- There is an _________ in an asset or a ________ in a liability
- The ________ or ________ can be measured _______
increase; decrease;
increase; decrease; reliably;
120
When an entity recognises a ____ on disposal of an _____, it also recognises a net increase in _____:
- Tangible assets _______, but
- Cash _______ by a greater amount
gain; asset; assets;
decrease;
increases;
121
- Generally accepted accounting practice is to recognise revenue when goods are _________ to the customer.
- This is the ________ event in the earnings cycle
- At this point the company has ________ its side of the sales contract with the customer and has earned the right to payment
despatched;
critical;
performed;
122
When a service is sold:
- Revenue is recognised when the service is _________.
- For example, revenue from a magazine subscription is recognised over the ______ of the subscription.
performed;
period;
123
An expense is recognised when:
- There has been a _______ in future economic benefits related to a _______ in an asset or an _________ in a liability.
- This _______ or ________ can be measured ________
decrease;
decrease; increase;
increase; decrease; reliably;
124
Derecognition normally occurs when:
- Assets: When _______ is lost
- Liabilities: When there is no longer a ______ _________
control;
present obligation;
125
An asset or liability is not derecognised if, for example:
1) An entity has apparently ___________ an asset but retains ________ to the significant ________ or ________ variations in the amount of economic benefits that may be produced by the ______.
transferred; exposure; positive; negative; asset;
126
An asset or liability is not derecognised if, for example:
2) An entity has ___________ an asset to another ______ that holds the asset as an ______ for the entity (meaning the entity still _______ the asset)
transferred; party; agent; controls;
127
The principal financial statements of a business are the:
- Statement of ________ __________
- Statement of ______ or ____ and ______ ____________ _______
financial position;
profit; loss; other comprehensive income;
128
Examples of assets:
- F________
- O_____ b________
- W_________
- D_______ v____
- L______
- P____ and m________
- C_______ equipment
- O_____ furniture
Factories;
Office buildings;
Warehouses;
Delivery vans;
Lorries;
Plant; machinery;
Computer;
Office;
129
Examples of liabilities:
- Amounts owed to a _________ for goods purchased on ______
- Amounts owed to a ____
- A b___ o________
- Amounts owed to t__ a_________
supplier; credit;
bank;
bank overdraft;
tax authorities;
130
In a limited liability company, _______ introduced usually takes the form of ______
capital; shares;
131
Non-current assets:
- P_______, p____ and e_________
- G_______
- O____ i________ a______
- F_______ a_____
Property, plant; equipment;
Goodwill;
Other intangible assets;
Financial assets;
132
Current assets:
- I__________
- T_____ r_________
- O_____ c_______ a______
- C___ and c___ e________
Inventories;
Trade receivables;
Other current assets;
Cash; cash equivalents;
133
Equity and liabilities:
- S____ c________
- R_______ e________
- O_____ c________ of e_____
Share capital;
Retained earnings;
Other components; equity;
134
Non-current liabilities:
- L___-t___ b__________
- D________ t___
- L___-t___ p_________
Long-term borrowings;
Deferred tax;
Long-term provisions;
135
Current liabilities:
- T_____ and o_____ p_______
- S_____-t____ b________
- Current portion of l___-t___ b_________
- Current t___ p_______
- S_____-t____ p________
Trade; other payables;
Short-term borrowings;
long-term borrowings;
tax payable;
Short-term provisions;
136
A statement of profit or loss and other comprehensive income is a ______ of ______ generated and ___________ incurred over a given period
record; income; expenditure;
137
Profit or loss and other comprehensive income may also be referred to as the s_________ of ____________ ________
statement; comprehensive income;
138
- Published annual financial statements of a _______ ________ company will usually be for a period of ___ _____
- Management may want to keep a closer eye on profitability by making up ________ or _______ statements from a management accounting perspective
limited liability;
one year;
quarterly; monthly;
139
The statement of profit or loss and other comprehensive income may be shown as:
1) A ______ statement; or
2) ___ statements:
i) A statement of _____ or ____; and
ii) A statement of ___________ income
single;
Two;
profit; loss;
comprehensive;
140
Under IFRS, limited liability companies are also required to prepare:
- A statement of changes in ______
- A statement of ____ _____
- N____ to the financial statements
equity;
cash flows;
Notes;
141
A statement of changes in equity shows the movements in:
- S____ c_______
- R______ e________
- R_______
for a period
Share capital;
Retained earnings;
Reserves;
142
The purpose of the statement is to show the transactions between the _______ and its ______
company; owners;
143
Transactions between a company and its owners include:
- Total c__________ i______ for the year
- C_________ from owners (issue of _______); and
- D__________ to owners: d_______ p___
comprehensive income;
Contributions; shares;
Distributions; dividends paid;
144
- The statement of cash flows shows all movements of ____ and ____ equivalents into and out of a business during the accounting period
- Cash flows are classified into o_______, i________ and f________ activities
cash; cash;
operating, investing; financing;
145
The criteria for recognition in the financial statements are:
i) Must meet the definition of an _________ of the financial statements
ii) Must be measured _______
iii) Probable that there will be an _____ or _____ of future economic benefits and there is a ____ transaction
iv) Must provide _______ information and a ______ _____________ of the transactions of the entity
element;
reliably;
inflow; outflow; past;
relevant; faithful representation;
146
How is a bank overdraft classified in the statement of financial position?
As a current liability
