639892
| Question | Answer |
| The objective of financial statements (as set out in the Framework) is? | To provide information about the financial position, performance and changes in a financial position of an entity that is useful to a wide variety of users in making economic decisions |
| What is the name of the IASB's conceptual framework? | The framework |
| The 2 FUNDAMENTAL qualitative characteristics in the framework are? | Relevance Faithful representation |
| 4 enhancing qualitative characteristics of the Framework are? | Comparibility Verifability Timeliness Understandability |
| What are the 5 elements of financial statements? | Assets Liabilities Equity Income Expenses |
| Framework definition of asset | A resource controlled by the entity as a result of a past transaction from which economic benefits are expected to flow to the entity. |
| Framework definition of a liability | An obligation of the entity arising from past events the settlement of which is expected to result in an outflow of economic benefits. |
| The framework definition of equity is | The residual interest in the assets of an entity after deducting all its liabilities |
| Framework definition of income | Increases in economic benefits in the period other than those relating to contributions from owners, that result in increases in equity. |
| Framework definition of expenses | Decreases in economic benefits, other than those relating to distributions to owners that result in decreases to equity |
| 4 Primary financial statements | Statement of profit or loss and other comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows |
| What is the accounting equation and how is this rearranged for the SOFP? | Assets- Liabilities = Equity Rearranged to: Assets= Equity + Liabilities |
| What are the 4 components of equity that you are likely to encounter in F1? | Share Capital Share Premium Reserves such as Revaluation Reserve Retained Earnings |
| Why are dividends not presented in the statement of POLCI? | Because they are not an expense. They are presented in the statement of changes in equity |
| Are proposed dividends recognised in the statement of changes in equity? | Only if they have been proposed and agreed by shareholders at the reporting date. If they are not recognised they will be disclosed in the notes to the accounts |
| What does the word 'Current' signify in the SOFP? | That the assets or liability will be expunged or change within the next financial reporting period. |
| For recognition in the financial statements an item must be an 'element'. What are the other two criteria? | Economic benefits associated with the item must flow to or from the entity The item has a cost or value that must be capable of reliable measurement |
| What is the name of the body that appoints members of the International Accounting Standards Board? (IASB) | IFRS Foundation (22 Trustees) |
| What is the role of the IFRS Interpretations Committee? | To review accounting standards subsequent to issue with a view to reaching an appropriate accounting treatment. |
| Steps involved in the issue of a new accounting standard | Topic on IASB timetable Technical staff create discussion paper Exposure draft issued New standard is issued after review of comments |
| Is it preferable to have a modified audit report or unmodified? | Unmodified |
| To which group is the audit report addressed? | Members (shareholders) |
| If the audit report uses the phrase 'without qualifying our opinion' to what is it likely to be referring? | 'An emphasis of matter' |
| What are the 2 major categories of a modified report? | Financial statements are 'not free from misstatement' Auditor has been given insufficient appropriate evidence. |
| Material but not pervasive leads to what sort of modified report? | Qualified 'expect for' |
| How would you define pervasive? | Seriously misleading- or potentially so in the case of a lack of evidence |
| In the case of something that is 'not free from misstatement and is also 'material and pervasive' the auditor would give... | An adverse opinion |
| In the case of insufficient appropriate evidence which could be material and pervasive the auditor would give | A disclaimer of opinion |
| What are the 3 major categories of a statement of cash flow as per IAS 7? | Net cash from operating activities Net cash used in investing activities Net cash used in financing activities |
| A loss from disposal of asset | Add back to Profit before tax |
| A decrease in inventory | Added |
| Decrease in trade receivables | Add to cash flow |
| Decrease in trade payables | Subtracted from cash flow |
| Increase in accruals | Added to cash flow |
| Decrease in prepayments | Added to cash flow |
| How should lease rentals be treated in the statement of cash flows? | The interest element will be swept up as part of the 'interest paid' Repayment of debt in the 'net cash used in financing activities section |
| IAS 18 Revenue Recognition | 1) Sale of Goods 2) Rendering of services 3) Use of entity's assets yielding interest, royalties and dividends |
| Revenue re sale of goods can be recognised when... | Risks and rewards are transferred to buyers No further managerial involvement from the seller Amount of revenue can be measured reliably Probable that economic benefits will accrue to the selling entity Costs involved can be measured reliably |
| What are the 3 criteria for determining operating segments as per IFRS 8? | Segments reviewed regularly by the entity's chief operating officer: 1) Revenue 10% </ 2) POL is 10</ 3) Assets</ Extra segments must be added until the 75% threshold is reached |
| IAS 16 permits the capitalising of costs up to what point? | To the point where the asset is capable of operating for its intended use |
| What happens to the cumulative depreciation on the revaluation of an asset? | It becomes nil |
| What happens to a positive revaluation reserve when an asset is disposed of? | The balance is transferred to retained earnings |
| What are the accounting entries to remove excess depreciation? | DR Reval Reserve CR Retained Earnings with the annual amount |
| If, under IAS 16, an asset is revalued/impaired to a figure below its carrying value, what happens? | The excess below the carrying value is charged to the income statement |
| The costs of training cannot be capitalised as per IAS 16? | True |
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