Question 1

According to AASB 101/IAS 1 Presentation of Financial Statements, a required format for the presentation of the statement of profit or loss and other comprehensive income is:

Accepted Answer

According to AASB 101/IAS 1, while there is no specific requirement for the format of the statement of profit or loss and other comprehensive income, guidance is provided in the standard for a suitable format. Therefore, option C is the correct answer. Option A and D are incorrect because the Corporations Act does not provide the required format for this statement. Option B is also incorrect since guidance is provided in the standard.

Question 2

An entity is required to classify its assets and liabilities as current or non-current unless it is considered more relevant to present them according to their:

Accepted Answer

An entity may classify its assets and liabilities according to their liquidity if it provides information that is reliable and more relevant than the traditional current/non-current classification. This approach is often used by entities like banks and financial institutions where liquidity presentation gives a better understanding of the financial position.

Question 3

Which of the following is not required to be displayed prominently in the financial statements?

Accepted Answer

The names of the company's major competitors are not required to be displayed prominently in the financial statements. The other options (A, C, and D) are required to be disclosed in the financial statements.

Question 4

Classes of property, plant and equipment do not include which of the following?

Accepted Answer

Inventories are not classified as property, plant, and equipment. They are classified as current assets and are meant for resale or production. Office equipment, furniture and fittings, land, and buildings are all examples of property, plant, and equipment.

Question 5

Which of the following is not included in a complete set of financial statements?

Accepted Answer

The answer of Which of the following is not included...

Question 6

Which of the following items are disclosed on the face of a statement of financial position as line items?

Accepted Answer

Biological assets are typically disclosed on the face of a statement of financial position as a line item under the category of non-current assets. Finance costs, cost of sales, and interest revenue are typically not disclosed as line items on the face of a statement of financial position.

Question 7

AASB 101/IAS 1 Presentation of Financial Statements requires disclosure of which of the following for each class of share capital?

Accepted Answer

AASB 101/IAS 1 require disclosure of all of the above for each class of share capital, including the par value per share, the number of shares authorised, and the rights, preferences, and restrictions attached to that class. This information is necessary for users of the financial statements to understand the company's capital structure and the advantages and disadvantages of investing in the different classes of shares.

Question 8

The time between the acquisition of assets for processing and their realisation into cash or cash equivalents is known as the:

Accepted Answer

The operating cycle is the time it takes to transform inventory into cash or cash equivalents. It encompasses the acquisition of assets for processing, the production process, the sale of the finished goods, and the collection of payment from customers. The payment cycle refers to the time it takes to pay suppliers for inventory, while the acquisition cycle refers to the process of acquiring goods and services from suppliers. The realisation cycle is not a commonly used term in accounting or finance.

Question 9

According to AASB 101/IAS 1 Presentation of Financial Statements, there must be consistency of presentation and classification of items in the financial statements from one period to the next unless:

Accepted Answer

According to AASB 101/IAS 1, consistency of presentation and classification of items in the financial statements must be maintained unless a change in presentation or classification is required by another accounting standard. Choice B, C, and D are incorrect as they are not valid reasons for changing the presentation or classification of items in the financial statements.

Question 10

AASB 101/IAS 1 Presentation of Financial Statements requires that a financial report:

Accepted Answer

AASB 101/IAS 1 requires that a financial report must include the name of the entity, but does not require specific mention of the reporting period or date (although these should be discernible from the report). The report should be prepared on an accrual basis, and should consider the entity as a going concern unless management intends to liquidate the entity or cease operations. Cash basis accounting is not consistent with the requirements of AASB 101/IAS 1.

Question 11

Asset, liability and equity items are summarised in the:

Accepted Answer

Asset, liability and equity items are summarised in the statement of financial position, also known as the balance sheet. The statement of profit or loss and other comprehensive income (A) shows revenues, expenses, gains, losses and other comprehensive income items. The statement of financial performance (B) does not exist in accounting terminology. The statement of changes in equity (D) shows the movements in equity during the reporting period.

Question 12

Profit or loss is the total of income less expenses:

Accepted Answer

Other comprehensive income items (such as unrealized gains or losses on investments) are not included in the calculation of profit or loss. Abnormal and extraordinary items may also be excluded depending on the accounting standards used.

Question 13

Which of the following items are not permitted to be disclosed as separate line items on the face of the statement of financial position?

Accepted Answer

Share of profit of associates is not permitted to be disclosed separately on the face of the statement of financial position. It should be included in the income statement. The other items (investment property, cash and cash equivalents, deferred tax assets) can be disclosed separately on the face of the statement of financial position.

Question 14

AASB 101/IAS 1 Presentation of Financial Statements, requires which of the following items to be disclosed separately on the face of the statement of profit or loss and other comprehensive income? I Cost of sales
II Revenue
III Finance costs
IV Share of the profit or loss from associates
V Audit and non-audit fees
VI Total other comprehensive income
VII Profit or loss

Accepted Answer

C) II, III, IV, VI, and VII only are required to be disclosed separately according to AASB 101/IAS 1. This includes Revenue, Finance costs, Share of the profit or loss from associates, Total other comprehensive income, and Profit or loss.

Question 15

Which of the following is not required to be disclosed in the statement of financial position as a line item?

Accepted Answer

Only assets, liabilities, and equity are required to be disclosed as line items in the statement of financial position. Accrued audit fees are not considered an asset, liability, or equity and therefore are not required to be disclosed as a line item.

Question 16

Which of the following statements is incorrect?

Accepted Answer

An entity is not permitted to classify deferred tax assets as current assets according to IAS 1 Presentation of Financial Statements. Deferred tax assets should be classified as non-current assets.

Question 17

The following are normally presented in a statement of financial position as current items:

Accepted Answer

Accounts payable is a current liability and is presented as a current item in a statement of financial position as it is expected to be settled within the next 12 months. Deferred tax liabilities and deferred tax assets are presented as non-current items as they relate to taxes to be paid or received in the future beyond the next 12 months. Property, plant and equipment is a non-current asset and is also presented as a non-current item in a statement of financial position.

Question 18

According to AASB 101/IAS 1 Presentation of Financial Statements, a required format for the presentation of a statement of financial position is:

Accepted Answer

AASB 101/IAS 1 does not prescribe a specific format for the statement of financial position but provides guidance on how it should be structured, ensuring relevant information is presented in a manner that is useful for decision-making.

Question 19

Which of the following items must be presented as a line item on the face of a statement of financial position?

Accepted Answer

Trade and other receivables are considered a current asset and must be presented as a line item on the face of the statement of financial position according to accounting standards. Sales revenue, cost of goods sold, and share of profit of subsidiaries are all considered income statement items and would not typically appear on the statement of financial position.

Question 20

Assets and liabilities, and income and expenses are not to be offset unless:

Accepted Answer

According to the principles of accounting, assets and liabilities, and income and expenses should not be offset, except where required or permitted by an Australian accounting standard. Therefore, option C is the correct choice. Options A, B, and D are incorrect because they do not comply with the general principles of accounting.

Quiz 5: Disclosure: Presentation of Financial Statements