PAS 19 - Employee Benefits Accounting Quiz

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.

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.