Question 1

Under AASB 101, profit or loss attributable to non-controlling interests is required to be presented in the:

Accepted Answer

Under AASB 101, profit or loss attributable to non-controlling interests is required to be presented in the statement of profit or loss and other comprehensive income. This statement presents the entity's revenue, expenses, gains, losses, and other comprehensive income for the period, and non-controlling interests' share of the profit or loss is included as a separate line item.

Question 2

Assets and liabilities, and income and expenses may be off-set if:

Accepted Answer

Offsetting assets and liabilities, or income and expenses, is only allowed if it is specifically required or permitted by an accounting standard.

Question 3

At reporting date for Year 1, Delta Limited had a loan from its financial institution that is expected to settle within six months. The loan term was renegotiated after reporting date and before the authorisation date of the financial statements and the repayment date was extended by two years. For the purposes of financial statement presentation for Year 1, this loan is classified by Delta Limited as a/an:

Accepted Answer

At reporting date for Year 1, the loan was expected to settle within six months, which means it qualifies as a current liability. Even though the loan term was renegotiated and the repayment date was extended by two years, this does not affect the classification of the loan in Year 1's financial statements. The loan will only be reclassified as a non-current liability in Year 2's financial statements.

Question 4

AASB 101 Presentation of Financial Statements applies to the following sets of financial statements:

Accepted Answer

AASB 101 Presentation of Financial Statements applies to general purpose financial statements, which provide information about the financial position, performance and cash flows of an entity that is useful to a wide range of users in making economic decisions. It does not apply to interim financial statements, which are prepared for a period shorter than a full financial year, or to special purpose financial statements, which are prepared for a specific user or purpose and may not include all the disclosures required by AASB 101. Converted financial statements are not a recognized term in the context of AASB 101.

Question 5

Items that are dissimilar in nature must be presented separately in financial statements unless:

Accepted Answer

If dissimilar items are immaterial, they need not be presented separately in the financial statements. However, if they are material, they must be presented separately.

Question 6

A liability will be classified as 'non-current' if it satisfies which of the following criterion?

Accepted Answer

A liability will be classified as non-current if it is due to be settled more than twelve months after the statement of financial position date.

Question 7

In respect to the statement of profit or loss and other comprehensive income of an entity, AASB 101 prescribes:

Accepted Answer

AASB 101 prescribes that entities must present line items in the statement of profit or loss and other comprehensive income that are considered to be of sufficient importance to warrant presentation. This means that line items for both revenue and expenses should be included, but only those that are significant enough to be meaningful to users of the financial statements. AASB 101 does not prescribe a fixed format for the presentation of these line items.

Question 8

Included in a statement of changes in equity are the following items:
I. Gains or losses not recognised in the statement of profit or loss and other comprehensive income.
II. New share issues.
III. Dividends paid.
IV. Opening and closing balances.
V. Profit or loss for the period.

Accepted Answer

The statement of changes in equity includes new share issues, dividends paid, and opening and closing balances.

Question 9

A set of financial statements prepared in accordance with AASB 101 comprises:
I. A statement of cash flows.
II. A statement of financial position.
III. A statement of changes in equity.
IV. A statement of profit or loss and other comprehensive income.
V. Notes.

Accepted Answer

A set of financial statements prepared in accordance with AASB 101 (Presentation of Financial Statements) comprises a statement of cash flows, a statement of financial position, a statement of changes in equity, a statement of profit or loss and other comprehensive income, and notes to the financial statements. Therefore, all five items (I, II, III, IV, and V) are included in a set of financial statements prepared in accordance with AASB 101.

Question 10

The primary source of information about an entity's financial position is to be found in its statement of:

Accepted Answer

The statement of financial position, also known as the balance sheet, provides information about an entity's financial position at a specific point in time, including its assets, liabilities, and equity. The other statements listed (cash flows, changes in equity, and profit or loss and other comprehensive income) provide information about the entity's financial performance over a period of time, but do not provide as comprehensive of a snapshot of its financial position as the statement of financial position.

Question 11

Which of the following note disclosures are not required by AASB 101?

Accepted Answer

AASB 101 requires companies to disclose their significant accounting policies, any sources of estimation uncertainty, and any dividends declared after the end of the reporting period but before the financial statements are authorized for issue. However, it does not require the names and qualifications of all directors of the entity to be disclosed.

Question 12

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

Accepted Answer

AASB 101 does not prescribe a specific format for the statement of financial position but provides guidance on how it should be presented, allowing entities to adapt the format to their specific circumstances while ensuring the presentation is clear, relevant, and provides a faithful representation of the entity's financial position.

Question 13

Industries where operating cycles may exceed twelve months typically include:

Accepted Answer

Property development involves long-term planning and construction, which may take several years to complete. Therefore, the operating cycle for property development may exceed twelve months. The other industries listed, such as retail, manufacturing, and food preparation, typically have shorter operating cycles.

Question 14

Which of the following items are normally classified as 'current' in a statement of financial position?
I. deferred tax liabilities.
II. accounts payable.
III. inventories.
IV. goodwill.

Accepted Answer

Deferred tax liabilities are generally classified as non-current liabilities as they are expected to be settled after more than one year. Accounts payable and inventories are normally classified as current assets or liabilities as they are expected to be settled within one year. Goodwill is usually classified as a non-current asset.

Question 15

Under AASB 101 Presentation of Financial Statements, which of the following items is disclosed separately on the face of a statement of financial position?

Accepted Answer

Under AASB 101, all of these items (investment property, cash and cash equivalents, and current tax liability) must be disclosed separately on the face of a statement of financial position.

Question 16

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

Accepted Answer

The most common way of classifying assets and liabilities is based on their liquidity, which refers to the ease with which an asset can be converted to cash or a liability can be settled with cash or other resources. This information is highly relevant and reliable for decision-making purposes, as it allows users to assess an entity's ability to meet its short-term obligations and cash needs. Age, value, and physical nature may also be relevant factors in some contexts, but they are generally less important than liquidity as they do not necessarily reflect an asset's or liability's current economic value or capacity to generate cash flows.

Question 17

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

Accepted Answer

Trade and other receivables must be presented as a separate line item in the statement of financial position. Share of profit of associates is typically presented as a line item within the consolidated statement of profit or loss, while revenue and cost of sales are typically presented as line items within the consolidated statement of profit or loss and/or statement of comprehensive income.

Question 18

According to AASB 101, a required format for the presentation of the statement of profit or loss and other comprehensive income is:

Accepted Answer

AASB 101 does not prescribe a specific format for the presentation of the statement of profit or loss and other comprehensive income, but it does provide guidance on how it should be presented.

Question 19

AASB 101 requires which of the following items to be disclosed separately in 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. Tax expense relating to extraordinary events.

Accepted Answer

AASB 101 requires that finance costs and tax expense relating to extraordinary events be disclosed separately in the statement of profit or loss and other comprehensive income. Additionally, the share of the profit or loss from associates should also be disclosed separately. However, cost of sales and revenue are reported as separate line items in the statement of profit or loss and are not required to be disclosed separately.

Question 20

Which of the following items does not have to be presented as a line item on the face of a statement of profit or loss and other comprehensive income?

Accepted Answer

Closing inventories are not presented as a separate line item on the face of the statement of profit or loss and other comprehensive income. Instead, they are included in the calculation of cost of goods sold or used in determining gross profit but are not listed separately on the income statement.

Quiz 16: Presentation of Financial Statements