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Introduction to financial reporting Exam
Questions And Answers
What does the financial account include? ( 5 main documents ) - correct answer ✅-Statement of cash flows -Statement of changes in equity -Statement of financial position -Notes -Statement of profit and loss Which accounting bodies help reduce the differences in the way that companies draw up their financial statements in different countries? - correct answer ✅The international accounting standards ( IAS standards ) and the International Financial reporting standards Management accounting is an integral parts of management activity concerned with indentifying presenting and interpreting information used for ...? - correct answer ✅- Formulating strategy -Planning and controlling activities -Decision making -Optimising the use of resources
Introduction to financial reporting Exam
Questions And Answers
What is the most sophisticated groups of investors? - correct answer ✅Unit trusts & Pension funds What is the capital and current account in a partnership? - correct answer ✅The capital account is normally a fixed amount that will only change upon a partnership joining or leaving the business The current account includes the share of profit or loss that each partner is entitled to - any personal drawings made by the partner What are limited liability companies? - correct answer ✅Separate legal entity between the owners and the business. This process is called ' incorporation'. Limited liability companies are managed by a board of directors who are elected by the shareholders.
Introduction to financial reporting Exam
Questions And Answers
referred to the UK as Registrar of Companies. Registration fees and legal costs must be paid.
- Normally a requirement for a company to produce annual financial statements that must be submitted to the company registry. Also need for these financial statements to be audited. The costs associated can be high -A registered company accounts and certain other documents are open to public inspection What is one of the most important documents underpinning the preparation of financial statements? - correct answer ✅The conceptual framework for financial reporting 2010 ( conceptual framework ) , prepared by the international accounting standards board ( IASB ). The Conceptual Framework presents the main ideas , concepts and principles upon which all international financial reporting standards and therefore financial statements are based. It includes
Introduction to financial reporting Exam
Questions And Answers
discussions of what 6 points? - correct answer ✅-The purpose of conceptual framework -Objectives of financial reporting -The qualitative characteristics of useful financial information -The definition , recognition and measurement of the elements from which the financial statements are conducted -The accruals and growing concern connects -The concepts of capital and capital maintenance What is the purpose of Conceptual Framework? - correct answer ✅The purpose of the conceptual framework is to assist the IASB in the development of financial reporting standards and to assist preparers of financial statements to develop accounting policies when reporting standards do not provide sufficient guidance. What is 'Prudence'? - correct answer ✅Is the exercise of caution when making judgements under conditions of uncertainty. This helps to ensure that assets and income are not overstated in the financial statements and liabilities and expenses are not understated.
Introduction to financial reporting Exam
Questions And Answers
What is the definition of a liability in accounting? - correct answer ✅A present obligation of the entity to transfer an economic resource as a result of past events. What is equity? - correct answer ✅The residual interest in the assets of the entity after deducting all liabilities assets - liabilities OR share capital + retained earnings What is a non current asset? - correct answer ✅Any tangible or intangible asset acquired on a long term basis to be used in providing a service to the business Not expected to be sold within twelve months after reporting period eg land buildings vehicles plant machinery What is a current asset? - correct answer ✅Assets expected to be realised sold or consumed
Introduction to financial reporting Exam
Questions And Answers
within the normal operating cycle or sold within twelve reporting period. eg inventory receivables and cash. What is a non current liability? - correct answer ✅Payment that can be deferred unconditionally for more than 12 months after the reporting period eg a loan What is a current liability? - correct answer ✅Liabilities that are expected to be settled within the normal operating cycle or held primarily for trading or is due to be settled within twelve months after the reporting period eg payables , bank overdrafts , short term loans What is the statement of financial positions? - correct answer ✅The statement of financial position summarises the assets liabilities and equity balances of the business at the end of the reporting period. What are more examples of current assets? - correct answer ✅Inventories
Introduction to financial reporting Exam
Questions And Answers
correct answer ✅The account which includes revenue and expenses . What is the statement of financial position? - correct answer ✅Does not include revenue and expenses only assets non current and current , liabilities , current and non current and equity. What is the stamens of changes in equity? - correct answer ✅The statement summarises the movement in equity balances ( share capital share premium , revaluation surplus and retained earnings ) What is the statement of cash flows? - correct answer ✅The statement summarises the cash paid and received through the reporting period. Normally recant to limited liability companies only rather than sole traders and partnerships. There are a number of other accounting principles and concepts that underpin the preparation of financial statements , what are the
Introduction to financial reporting Exam
Questions And Answers
most significant ones? - correct answer ✅-Materiality and aggregation -Substance over form -Going concern -The business entity -Accruals basis -Prudence -Consistency -Offsetting -Duality ( dual aspect) -Historical costs and current value What is it meany by materiality and aggregation? - correct answer ✅An item is regarded as material if its omission or misstatement is likely to change the perception of undertsnaidng of the suers of the information - ie they may make inappropriate decisions based upon the misstated information. Note : this is a subjective assessment madly those who prepare the financial statements ( usually company directors)
