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Flashcards by Elena Suciu, updated more than 1 year ago
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| Question | Answer |
| 1 What is IAS 1? | PRESENTATION OF FINANCIAL STATEMENTS |
| 1 What is the purpose of the standard PRESENTATION OF FINANCIAL STATEMENTS? | •Set out how financial statements should be presented to ensure comparability with previous accounting periods and with other companies |
| 1 What is the purpose of financial staements? | THE PURPOSE OF FINANCIAL STATEMENTS IS TO "PROVIDE 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" |
| 1 What is the Financial Position reported through? | balance sheet |
| 1 What is the Financial Performance reported through? | income statement |
| 1 What is the Cash Flows reported through? | cash flow statement |
| 1 Define Entity? | an organisation, such as a limited company |
| 1 How do you use to make a Economic Decision? | information from the financial statements is used to help in making decisions about investment in the company |
| 1 What is included in Financial statements: | •Income Statement •Balance sheet •Statement of changes in equity •Cash Flow Statement •Accounting policies and Expanatory notes |
| 1 What MAIN accounting concepts comply with IAS 1? | Goings concern Accuals Consistency Materiality |
| 1 What accounting concepts are the bedrock of IAS 1? | Prudence Business Entity Realisation Historical costs Money Measure Duality |
| 1 Other Considerations to take into accounts when preparing company financial accounts? | Offsetting & Comparative infomation |
| 1 What is Offsetting? | Generally its not permitted to set-off assets and liabilites, and income and expenses against each other in order to show a net figure, eg cash at bank is not to be netted off against a bank overdraft |
| 1 What is Comparative infomation? | its a requirement to show the figures from previous time period in the financial statements in order to help users of the statements. |
| 2 What is IAS 2? | INVENTORIES |
| 2 What does types of inventories does it apply to? | Applies to all types of inventories |
| 2 What is is IAS 2 used for? | Used to set out the accounting techniques to be used when valuing inventories |
| 2 What are the different forms of inventories? | •Raw material •work-in-progress •Products brought for resale by a retailer •service items |
| 2 Define Raw Material inventories? | •Raw material, for use in a manufacturing business |
| 2 Define work-in-progress inventories? | •work-in-progress (partly manufactured goods) and finished goods (ready for sale) of a manufacturing business |
| 2 Define Resale inventories? | •Products brought for resale by a retailer |
| 2 Define service items inventories? | •service items, such as stationary, brought for use within business |
| 2 What is the overriding principle of inventory valuation, as set out in IAS 2? | inventories are to be valued at "the lower of cost and net realisable value" |
| 2 how many different values are compared when calculating the lowest value of the inventories? | 2 - Cost & Net realisable value |
| 2 Define Cost in relation to valuing the inventories? | •Cost, which means the purchase price, plus any other cost incurred to bring the product to its present location and condition |
| 2 Define Net realisable value in relation to valuing the inventories? | •Net realisable value, which is the estimated selling price less the estimated costs to get the product into a condition necessary to complete the sale |
| 2 Which one of Cost & Net realisable value is recorded? | Lower value |
| 7 What is IAS 7? | CASH FLOW STATEMENTS |
| 7 What is the perpose of IAS 7? | Ias 7 requires that a cash flow statement is included as part of a company's financial statements |
| 7 What is the cash flow statement used for? | •Cash flow statement focuses on cash inflow and outflows, and reports on changes in the financial position of the company |
| 7 Where does the cash flow statement get its information from? | A Cash Flow statement uses information from the accounting records (including income statement and balance sheet) to show an overall view of money flowing in and out of a business during an accounting period |
| 7 IAS 7 provides the format for cash flow statements, divided into how many sections? | 3 - Operating activities, Investing activities & Financing activities |
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