Financial Reporting Standards: Period Changes and Comparative Information
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Questions and Answers

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?

<p>Size of the item relative to others (A)</p> Signup and view all the answers

What does 'Offsetting' refer to in financial reporting?

<p>Presenting a net figure by combining related financial amounts (D)</p> Signup and view all the answers

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

<p>At least annually (A)</p> Signup and view all the answers

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

<p>To faithfully represent the effects of transactions (A)</p> Signup and view all the answers

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

<p>Providing irrelevant information in financial statements (A)</p> Signup and view all the answers

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

<p>When departing from the standard enhances fair presentation (B)</p> Signup and view all the answers

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

<p>That management has concluded the financial statements are fairly presented (A)</p> Signup and view all the answers

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

<p>Hiding important financial data from users (C)</p> Signup and view all the answers

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

<p>Selecting and applying accounting policies according to PFRS (C)</p> Signup and view all the answers

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

<p>The reasons for using a shorter or longer period (C)</p> Signup and view all the answers

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

<p>When an entity makes retrospective restatement of items in the financial statements (A)</p> Signup and view all the answers

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

<p>To provide information on changes over time (B)</p> Signup and view all the answers

What does the principle of consistency require in accounting?

<p>Applying accounting methods and practices on a uniform basis from period to period (D)</p> Signup and view all the answers

When should an entity present three statements of financial position?

<p>At the end of the current period, previous period, and beginning of the earliest comparative period (C)</p> 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?

<p><strong>Make such change</strong> even if it alters the uniform application of accounting methods and practices (B)</p> Signup and view all the answers

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