Equity in Financial Reporting Quiz
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Questions and Answers

What does equity represent?

  • The amount of money owed by a company
  • The difference between assets and liabilities (correct)
  • The value of a company's shares
  • The sum of assets and liabilities

    • According to IAS 1, what information should be disclosed about each class of share capital?

  • The par value per share
  • The number of shares authorised (correct)
  • The dividend payments made
  • The number of shares outstanding

    • What is an important information to be included in the financial statements according to IAS 1?

  • The statement of cash flows
  • The statement of changes in equity (correct)
  • The income statement
  • The balance sheet

    • Which of the following is a reason for recognizing a loss on exchange rate in the OCI?

    <p>The payment date exchange rate is different from the purchase date exchange rate</p> Signup and view all the answers

    What happens to the loss on exchange rate when the payables are not paid yet?

    <p>The loss is recognized in a specific reserve in the equity</p> Signup and view all the answers

    Which of the following is a mandatory information to be included in the statement according to OIC 28?

    <p>All of the above</p> Signup and view all the answers

    Which of the following is included in the statement of changes in equity?

    <p>Total comprehensive income for the period</p> Signup and view all the answers

    What does the reconciliation in the statement of changes in equity disclose?

    <p>Changes in profit or loss</p> Signup and view all the answers

    Where should the amount of dividends recognized as distributions to owners be presented?

    <p>Statement of changes in equity</p> Signup and view all the answers

    What does the overall change in equity during a period represent?

    <p>Total comprehensive income for the period</p> Signup and view all the answers

    Study Notes

    Equity and Financial Statements

    • Equity represents the residual interest in the assets of an entity after deducting its liabilities.

    Disclosure of Share Capital Information

    • According to IAS 1, the following information should be disclosed about each class of share capital:
      • Number of shares authorized
      • Number of shares issued and fully paid
      • Number of shares issued but not fully paid
      • Par value per share
      • Reconciliation of the number of shares outstanding at the beginning and end of the period

    Important Information in Financial Statements

    • An important information to be included in the financial statements according to IAS 1 is the reconciliation of the number of shares outstanding at the beginning and end of the period.

    Recognition of Loss on Exchange Rate

    • A loss on exchange rate is recognized in Other Comprehensive Income (OCI) when the exchange rate changes and the entity has a foreign currency transaction.
    • When the payables are not paid yet, the loss on exchange rate is still recognized in OCI.

    Mandatory Information in Statement of Changes in Equity

    • According to IAS 28, the following information is mandatory to be included in the statement:
      • Total comprehensive income
      • Transactions with owners in their capacity as owners

    Statement of Changes in Equity

    • The statement of changes in equity includes:
      • Comprehensive income
      • Transactions with owners
      • Changes in equity resulting from those transactions

    Reconciliation in Statement of Changes in Equity

    • The reconciliation in the statement of changes in equity discloses the movements in equity during a period.

    Presentation of Dividends

    • The amount of dividends recognized as distributions to owners should be presented in the statement of changes in equity.

    Overall Change in Equity

    • The overall change in equity during a period represents the net effect of all transactions and events that change equity during that period.

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    Description

    Test your knowledge on equity and its importance in financial reporting. Learn about the definition of equity, its relationship to assets and liabilities, and the disclosure requirements according to IAS 1.

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