3. The Statement Of Financial Position Flashcards Preview

AAT Level 4 - Financial Statements Of Limited Companies > 3. The Statement Of Financial Position > Flashcards

Flashcards in 3. The Statement Of Financial Position Deck (15)
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1
Q

What does IAS1 identify?

A
  • the purpose of financial statements

- complete set of financial statements

2
Q

What does a complete set of financial statements per IAS1 comprise of?

A
  • statement of profit or loss and other comprehensive income
  • statement of financial position
  • statement of changes in equity
  • statement of cash flows
  • notes to the financial statements
3
Q

What information must be displayed on the financial information?

A
  • Name of the entity
  • If the financial statements are for a single company or a group
  • The accounting period end date
  • The currency
  • The rounding level
4
Q

What does IAS1 state?

A

Financial statements shall present fairly the financial position, financial performance and cash flows of an entity.

5
Q

What are the 5 fundamental accounting concepts that IAS1 require?

A

1) accruals concept
2) going concern concept
3) consistency - classification from one period to the next
4) offsetting - assets and liabilities should not be offset unless required of permitted by the relevant standard.
5) materiality and aggregation - each material class of similar items should be presented separately in the financial statements.

6
Q

What is required in the disclosure of shares in the financial statements?

A
  • number of shares authorised
  • number of shares issued and paid for
  • nominal value of the share
  • class of the share
7
Q

What are the types of reserves?

A
  • Revaluation reserve

- Retained earnings

8
Q

What is a revaluation reserve?

A

It arises if you revalue an asset. It is a non distributable reserve and it serves a particular purpose and is used when we increase the value of a non-current asset.

9
Q

What are retained earnings?

A

Accumulation of profits and losses made over the years after deducting any dividends, so the balance of undistributed profits. Any distribution of profit to the owners will be deducted.

10
Q

What is dividends never?

A

An expense

11
Q

How are dividends treated?

A

As a reduction in retained earnings

12
Q

What are the two stages dividend can be paid?

A

Interim (mid year)

Final (end of year)

13
Q

Which accounting period should dividends be included in?

A

The accounting period they have been approved by directors in

14
Q

What needs to be disclosed with dividends?

A
  • their nature and purpose of each reserve
  • reconciliation between b/f and c/f amounts
  • proposed dividends which have not been approved by year end and the date of declaration and amount
15
Q

What are the steps for drafting the SOFP?

A
  1. Review the proforma
  2. Workings
  3. Enter the figures
  4. Post the double entries
  5. Complete the workings