Question 1

Under IAS 1/AASB 101, which format is subscribed for the statement of financial position?
A) No one format is prescribed
B) Assets = equity + liabilities
C) Equity = assets - liabilities
D) Assets - liabilities = equity

Accepted Answer

IAS 1/AASB 101 does not prescribe a specific format for the statement of financial position, allowing organizations flexibility in how they present their financial information.

Question 2

Under IAS 1/AASB 101, concerning the statement of changes in equity, it is true that:
A) it is an additional financial report that each entity is required to supply to its external users.
B) it only shows changes in retained earnings not changes in share capital.
C) transfers to reserves from retained profits do not have to be separately disclosed as they do not change total equity.
D) opening and closing total equity must be reconciled showing all the changes for the period but this is not necessary for the components of equity.

Accepted Answer

The statement of changes in equity is a required financial statement under IAS 1/AASB 101, which entities must provide to external users, showing changes in equity components.

Question 3

What is the correct heading on a statement of financial position made up to 30 June 2016? A) As at 30 June 2016 B) For the year ended 30 June 2016 C) For the period ended 30 June 2016 D) 30^th June 2016

Accepted Answer

The correct heading for a statement of financial position is "As at" followed by the date the statement is made up to.

Question 4

Under IAS 1/AASB 101 which of these is most likely to be classified as a non-current asset?
A) Deferred tax
B) Inventories
C) Goodwill
D) Long-term borrowings

Accepted Answer

Goodwill is classified as a non-current asset because it represents the future economic benefits arising from assets that are not capable of being individually identified and separately recognized. It is recognized in a business combination and is not expected to be converted into cash or consumed within one year or the operating cycle, which is a characteristic of non-current assets.

Question 5

Under the accounting standards, which of these is included in the calculation of a company's profit or loss (not including other comprehensive income in the definition of profit)?
$\bullet$Downward revaluations of non-current assets, not requiring adjustment to a revaluation surplus.
$\bullet$Upward revaluations of non-current assets requiring adjustment to a revaluation surplus.
$\bullet$Gains or losses on remeasuring investments in equity instruments.
$\bullet$Adjustments from translation of the financial statements of a foreign operation.
A) 1
B) 2
C) 3
D) 4

Accepted Answer

Under accounting standards, only downward revaluations of non-current assets that do not require adjustment to a revaluation surplus are included in the calculation of a company's profit or loss. Upward revaluations of non-current assets that require adjustment to a revaluation surplus, gains or losses on remeasuring investments in equity instruments, and adjustments from translation of financial statements of a foreign operation are not included in the definition of a company's profit or loss, but rather are included in other comprehensive income.

Question 6

It is true under IAS 1/AASB 101 that:
A) for the balance sheet all assets and liabilities must be classified as current or non-current (unless a liquidity presentation is more appropriate).
B) there is a prescribed format set out for the balance sheet.
C) movements in reserves must be shown on the face of the balance sheet.
D) the balance sheet must begin with the assets section.

Accepted Answer

Under IAS 1/AASB 101, all assets and liabilities on the balance sheet must be classified as either current or non-current, unless a presentation based on liquidity provides information that is reliable and more relevant. There is no prescribed format for the balance sheet, movements in reserves are not required to be shown on the face of the balance sheet, and there is no requirement for the balance sheet to begin with the assets section.

Question 7

How many of these are true statements concerning the statement of changes in equity?
$\bullet$It provides a link between the statement of profit or loss and other comprehensive income and the statement of financial position.
$\bullet$It provides a link between the statement of profit or loss and other comprehensive income and the statement of cash flows.
$\bullet$It is only required to be prepared by disclosing entities.
A) 0
B) 1
C) 2
D) 3

Accepted Answer

The first statement is true, as the statement of changes in equity summarizes the changes in equity between two periods and provides a link between the statement of profit or loss and other comprehensive income and the statement of financial position.

The second statement is not true, as the statement of changes in equity does not provide a direct link with the statement of cash flows.

The third statement is not true, as the statement of changes in equity is required to be prepared by all entities, not just disclosing entities.

Therefore, only statement 1 is true, and the answer is B.

Question 8

The approach contained in IAS 1/AASB 101 to the determination of a company's profit or loss is:
A) the new approach.
B) the inclusive approach.
C) the all-inclusive profit approach.
D) the equity approach.

Accepted Answer

IAS 1/AASB 101 adopts the all-inclusive profit approach, which requires that all items of income and expense recognized in a period be included in profit or loss unless a standard or an interpretation requires otherwise.

Question 9

When might borrowing costs not appear in a statement of comprehensive income?
A) If they result from a negatively geared project.
B) If they are less than five percent of total expenses.
C) If borrowing costs are directly attributable to the acquisition, construction or production of a qualifying asset.
D) If they relate to research expenditure.

Accepted Answer

Borrowing costs are only capitalized and included in the carrying amount of a qualifying asset if they are directly attributable to the acquisition, construction, or production of that asset. If they are not directly attributable, they are expensed in the period incurred and do not appear in the statement of comprehensive income.

Question 10

What are the accounting standards that are specific to the nature and disclosure of income?
A) IAS 1/AASB 101/IAS 7/AASB 107
B) IAS 16/AASB 116/IAS 7/AASB 107
C) IAS 7/AASB 107/ IAS 18/AASB 118
D) IAS 1/AASB 101/IAS 18/AASB 118

Accepted Answer

IAS 1/AASB 101 and IAS 18/AASB 118 are specifically related to the presentation of financial statements and the recognition of revenue, which directly impacts the nature and disclosure of income.

Question 11

Under the accounting standards, which of these is not included in the calculation of a company's profit or loss (not including other comprehensive income in the definition of profit)?
A) Gain on the sale of fixed assets
B) Dividends received
C) Adjustments from translation of the financial statements of a foreign operation
D) Expense on the impairment of assets held

Accepted Answer

Adjustments from the translation of the financial statements of a foreign operation are not included in the calculation of a company's profit or loss as defined traditionally. These adjustments are typically recognized in other comprehensive income, not in profit or loss.

Question 12

Under IAS 1/AASB 101 the statement of changes in equity must disclose how many of the following?
$\bullet$Total comprehensive income for the period.
$\bullet$A reconciliation between carrying amount at the beginning and end of the period for each item of equity.
$\bullet$Contributions by and distributions to owners, disclosed separately.
A) 0
B) 1
C) 2
D) 3

Accepted Answer

Under IAS 1/AASB 101, the statement of changes in equity must disclose all three items: total comprehensive income for the period, a reconciliation between carrying amount at the beginning and end of the period for each component of equity, and contributions by and distributions to owners, disclosed separately.

Question 13

When might borrowing costs not appear in a statement of profit or loss and other comprehensive income?
A) If they result from a negatively geared project.
B) If they are less than five percent of total expenses.
C) If borrowing costs are directly attributable to the acquisition, construction or production of a qualifying asset.
D) If they are not incurred in the ordinary course of business.

Accepted Answer

Borrowing costs are capitalized if they are directly attributable to the acquisition, construction or production of a qualifying asset, as per IAS 23. In such cases, these costs are added to the cost of the asset, and are not recognized in the statement of profit or loss and other comprehensive income. Options A, B and D are not correct as they do not relate to the criteria for capitalization of borrowing costs.

Question 14

How many of these expenses that would normally appear in an internally prepared income statement are required to be separately disclosed in an external income statement prepared to conform to the requirements of the accounting standards?
$\bullet$Advertising
$\bullet$Insurance
$\bullet$Telephone
A) 0
B) 1
C) 2
D) 3

Accepted Answer

Accounting standards typically do not require the separate disclosure of advertising, insurance, or telephone expenses in an external income statement. These are generally included in operating expenses or similar categories without individual breakdowns.

Question 15

Which of these is not an expense item that requires separate disclosure under the accounting standards in the statement of profit or loss and other comprehensive income or in the notes attached to the statement?
A) Rent expense
B) Bad and doubtful debts
C) Impairment expenses of non-current assets
D) Interest paid

Accepted Answer

All the other options (B, C, and D) are expenses that require separate disclosure under accounting standards either in the statement of profit or loss and other comprehensive income or in the notes attached to the statement. Rent expense is commonly disclosed as part of operating expenses and does not require separate disclosure under accounting standards.

Question 16

If expenses are classified into the groups, cost of sales, selling expenses, administrative expenses and finance expenses, under IAS 1/AASB 101 they are classified by:
A) nature.
B) function.
C) liquidity.
D) tangibility.

Accepted Answer

IAS 1/AASB 101 require expenses to be classified by their function, i.e. cost of sales, selling expenses, administrative expenses and finance expenses, in order to provide information that is relevant to users in assessing an entity's financial performance. Classifying expenses by nature (A) would refer to the type of expense, such as salaries, rent, etc., rather than the function they serve. Liquidity (C) and tangibility (D) are not relevant classifications for expenses.

Question 17

The approach contained in IAS 1/AASB 101, requiring all income and expenses to be included in the determination of profit, is known as:
A) the reporting method approach.
B) the all-inclusive profit approach.
C) the operating approach.
D) the complete profit approach.

Accepted Answer

The approach contained in IAS 1/AASB 101, requiring all income and expenses to be included in the determination of profit, is known as the all-inclusive profit approach. This means that all items of income and expense, including those that may not be directly related to the main business activity, are reported in the financial statements. This approach is in contrast to the operating approach, which only includes income and expenses that are related to the main business activity.

Question 18

What is the correct heading on a statement of financial position made up to 30 June 2014?
A) As at 30 June 2014
B) For the year ended 30 June 2014
C) For the period ended 30 June 2014
D) 30th June 2014

Accepted Answer

The correct heading for a statement of financial position is "As at" followed by the date, in this case "30 June 2014". This indicates that the statement is a snapshot of the entity's financial position at that particular point in time. Option B and C are incorrect as they suggest the statement covers a full year or period, rather than just a specific date. Option D is incomplete as it does not include the "As at" wording.

Question 19

Which category of revenue listed does not require separate disclosure under IAS 18/ AASB 118?
A) Revenue from the rendering of services
B) Royalties
C) Dividends received
D) Rents received

Accepted Answer

Rents received do not require separate disclosure under IAS 18/AASB 118, as the standard primarily focuses on revenue from the sale of goods, rendering of services, interest, royalties, and dividends.

Question 20

What is an alternative name for the balance sheet?
A) Statement of financial performance
B) Statement of financial balances
C) Statement of financial situation
D) Statement of financial position

Accepted Answer

The alternative name for the balance sheet is the statement of financial position. The statement shows the company's financial position at a specific point in time, including its assets, liabilities, and equity. The names "statement of financial balances" and "statement of financial performance" are not correct names for the balance sheet. The "statement of financial situation" is a close alternative, but the more commonly used term is "statement of financial position."

Quiz 23: Presentation of Financial Statements

Under IAS 1/AASB 101, which format is subscribed for the statement of financial position?

Under IAS 1/AASB 101, concerning the statement of changes in equity, it is true that:

What is the correct heading on a statement of financial position made up to 30 June 2016?

Under IAS 1/AASB 101 which of these is most likely to be classified as a non-current asset?

It is true under IAS 1/AASB 101 that:

The approach contained in IAS 1/AASB 101 to the determination of a company's profit or loss is:

When might borrowing costs not appear in a statement of comprehensive income?

What are the accounting standards that are specific to the nature and disclosure of income?

Under the accounting standards, which of these is not included in the calculation of a company's profit or loss (not including other comprehensive income in the definition of profit) ?

When might borrowing costs not appear in a statement of profit or loss and other comprehensive income?

How many of these expenses that would normally appear in an internally prepared income statement are required to be separately disclosed in an external income statement prepared to conform to the requirements of the accounting standards? $\bullet$ Advertising $\bullet$ Insurance $\bullet$ Telephone

Which of these is not an expense item that requires separate disclosure under the accounting standards in the statement of profit or loss and other comprehensive income or in the notes attached to the statement?

If expenses are classified into the groups, cost of sales, selling expenses, administrative expenses and finance expenses, under IAS 1/AASB 101 they are classified by:

The approach contained in IAS 1/AASB 101, requiring all income and expenses to be included in the determination of profit, is known as:

What is the correct heading on a statement of financial position made up to 30 June 2014?

Which category of revenue listed does not require separate disclosure under IAS 18/ AASB 118?

What is an alternative name for the balance sheet?