Financial Reporting Standards: Period Changes and Comparative Information

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Which accounting principle requires financial statements to be prepared assuming the entity will continue in operation for the foreseeable future?

Accrual Basis Principle

Offsetting Principle

Going Concern Principle (correct)

Materiality and Aggregation Principle

What is the primary reason for disclosing the fact that financial statements are not prepared on a going concern basis?

To comply with materiality and aggregation requirements

To simplify financial reporting

To inform stakeholders about uncertainties regarding the entity's future operations (correct)

To provide a clearer picture of an entity's financial position

How are transactions and events recognized in financial statements under the Accrual Basis principle?

At the end of the reporting period

When cash is received or paid

Only after they affect cash or cash equivalents

When they occur, regardless of cash flow timing (correct)

Which factor determines whether an item is considered material in financial reporting?

Size of the item relative to others Signup and view all the answers

What does 'Offsetting' refer to in financial reporting?

Presenting a net figure by combining related financial amounts Signup and view all the answers

How frequently should an entity present a complete set of financial statements according to general reporting standards?

At least annually Signup and view all the answers

What is the main objective of fair presentation in financial statements?

To faithfully represent the effects of transactions Signup and view all the answers

Which of the following is NOT a requirement for fair presentation?

Providing irrelevant information in financial statements Signup and view all the answers

When is an entity allowed to depart from a standard according to the text?

When departing from the standard enhances fair presentation Signup and view all the answers

What should an entity disclose if it departs from a standard?

That management has concluded the financial statements are fairly presented Signup and view all the answers

Which of the following is NOT a responsibility of an entity regarding financial statements?

Hiding important financial data from users Signup and view all the answers

What is one of the key aspects an entity must ensure for fair presentation?

Selecting and applying accounting policies according to PFRS Signup and view all the answers

What does an entity need to disclose when changing its reporting period?

The reasons for using a shorter or longer period Signup and view all the answers

When is a Third Statement of Financial Position required for an entity?

When an entity makes retrospective restatement of items in the financial statements Signup and view all the answers

What is the purpose of presenting comparative figures in financial statements?

To provide information on changes over time Signup and view all the answers

What does the principle of consistency require in accounting?

Applying accounting methods and practices on a uniform basis from period to period Signup and view all the answers

When should an entity present three statements of financial position?

At the end of the current period, previous period, and beginning of the earliest comparative period Signup and view all the answers

What should an entity do if a change will result in information that is faithfully represented and more relevant to users?

Make such change even if it alters the uniform application of accounting methods and practices Signup and view all the answers