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Questions and Answers
How does PAS 19 define employee benefits?
How does PAS 19 define employee benefits?
- Goods and services provided only to the employee
- All forms of consideration given by an entity in exchange for service rendered by employees (correct)
- Benefits provided only to dependents of employees
- Cash payments only
What is the recognition treatment for employee benefits under PAS 19?
What is the recognition treatment for employee benefits under PAS 19?
- Always treated as liabilities
- Recognized as expenses, except when they form part of the cost of another asset (correct)
- Completely disregarded in financial statements
- Recognized as income for the employer
Who is included in the definition of 'employees' according to PAS 19?
Who is included in the definition of 'employees' according to PAS 19?
- Only top management employees
- Only regular employees
- All employees irrespective of their employment status (regular, part-time, or casual) (correct)
- Only full-time employees
Which of the following is not a category of employee benefits under PAS 19?
Which of the following is not a category of employee benefits under PAS 19?
How are short-term employee benefits recognized?
How are short-term employee benefits recognized?
What gives rise to employee benefits according to PAS 19?
What gives rise to employee benefits according to PAS 19?
What is the main focus of cash flows from operating activities?
What is the main focus of cash flows from operating activities?
Why are cash flows from buying and selling held for trading securities classified as operating activities?
Why are cash flows from buying and selling held for trading securities classified as operating activities?
What type of cash flows are considered as examples of operating activities?
What type of cash flows are considered as examples of operating activities?
Why are loan transactions of financial institutions classified as operating activities?
Why are loan transactions of financial institutions classified as operating activities?
In the statement of cash flows, what do cash flows from investing activities involve?
In the statement of cash flows, what do cash flows from investing activities involve?
Which activity involves the acquisition and disposal of property, plant, and equipment?
Which activity involves the acquisition and disposal of property, plant, and equipment?
What type of investments qualify as cash equivalents?
What type of investments qualify as cash equivalents?
How do cash flows differ from cash equivalents?
How do cash flows differ from cash equivalents?
What does the statement of cash flows help users assess?
What does the statement of cash flows help users assess?
How can an entity have negative cash flows despite reporting profits?
How can an entity have negative cash flows despite reporting profits?
Which of the following is considered as 'cash' according to PAS 7?
Which of the following is considered as 'cash' according to PAS 7?
Why are debt instruments acquired more than 3 months before maturity not considered cash equivalents?
Why are debt instruments acquired more than 3 months before maturity not considered cash equivalents?
Study Notes
Employee Benefits (PAS 19)
- Employee benefits are all forms of consideration given by an entity in exchange for service rendered by employees.
- This includes cash, goods, or services provided to employees or their dependents.
- Employees include regular, part-time, or casual workers, regardless of position.
- Employee benefits are recognized as expenses, except when they form part of the cost of another asset.
- Unpaid employee benefits are recognized as liabilities.
- Employee benefits arise from contractual agreements, legislation, and informal practices that create constructive obligations.
Categories of Employee Benefits (PAS 19)
- Short-term employee benefits
- Post-employment benefits
- Other long-term employee benefits
- Termination benefits
Statement of Cash Flows (PAS 7)
- Presents cash flows according to three classifications: Operating Activities, Investing Activities, and Financing Activities.
- Provides information about the sources and utilization of cash and cash equivalents during the period.
Classification of Cash Flows (PAS 7)
- Operating Activities: Cash flows from principal revenue-producing activities, including cash inflows and outflows from income and expenses.
- Examples: cash receipts from sales, cash payments for purchases, operating expenses, and income taxes.
- Special items: cash flows from buying and selling held for trading securities, and loan transactions of financial institutions.
- Investing Activities: Cash flows from acquisition and disposal of noncurrent assets and other investments.
- Examples: cash receipts and payments for property, plant, and equipment, investment property, intangible assets, and other noncurrent assets.
Cash and Cash Equivalents (PAS 7)
- Cash: cash on hand and cash in bank.
- Cash Equivalents: short-term, highly liquid investments that are readily convertible to known amounts of cash and subject to an insignificant risk of changes in value.
- Examples: 1-year treasury bill, 90-day money market instrument, 3-month time deposit.
- Only debt instruments acquired within 3 months or less before their maturity date can qualify as cash equivalents.
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Description
This quiz covers the accounting principles prescribed by PAS 19 for employee benefits, excluding those covered by PFRS 2 and PAS 26. It includes topics such as different forms of employee benefits and reporting by employee benefit plans.
