ias 1 presentation of financial statements questions and answers

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Introduction to IFRS – IAS 1 Presentation of Financial Statements

If you would like to dive into the world of international financial reporting standards (IFRS), you have to be aware of what IFRS and IAS means, what the difference between the standards and the conceptual framework is, what the fundamental definition of assets and liabilities is, etc. This course provides answers to these questions using practical examples.

The course consists of two parts. First part, after the introduction to the IFRS, explains the most important concepts of the Conceptual Framework. In the second part IAS 1 Presentation of financial statements standard’s requirements are presented including practical examples and interim tests to enhance understanding. 

This course will enable you to:

understand the concept of international financial reporting standards

identify main features of the Conceptual Framework

understand the qualitative characteristics of useful financial information (fundamental and enhancing)

decide whether the standard or the conceptual framework prevail in case they are in conflict with each other

understand the definition of control

distinguish main accounting considerations and define which are applicable to the primary statements (statement of comprehensive income, statement of financial position, statement of changes in equity, statement of cash flows and notes)

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Training hours: 50 minutes

Language: English

• Topics: IFRS, Reporting
• Sector: Corporates

Training method: E-learning

Type: Single course

Geographic relevance: Global

This e-learning course is part of an e-learning series designed by PwC Academy Hungary which aims to provide a comprehensive overview of the application of IFRS (IAS) standards to finance and accounting experts who are already familiar with fundamental (local) accounting and reporting processes.

This e-learning course takes approximately 50 minutes to complete, and as such, it can provide 1 learning hour – 1 CPD point based on a 50-minute hour. Upon completion of this course, you can print the certificate of completion as an evidence that you undertook the course.

In case you need CPA CPE credit points, please contact us for the certificates.

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IAS 1 Presentation of Financial Statements

Learn the key accounting principles to be applied to financial statements, including fair presentation and compliance with IFRS Standards.

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IAS 1: Financial Statement Presentation

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Questions and Answers

What is the objective of ias 1 (2007).

To prescribe the basis for presentation of general purpose financial statements

To which financial statements does IAS 1 apply?

General purpose financial statements prepared in accordance with IFRSs

What do general purpose financial statements aim to provide information about?

Financial position, performance, and cash flows of an entity

What are considered as assets in financial statements?

<p>Resources controlled by the entity as a result of past events</p> Signup and view all the answers

What is the scope of IAS 1?

<p>All general purpose financial statements prepared and presented in accordance with IFRSs</p> Signup and view all the answers

What is the objective of general purpose financial statements?

<p>To provide information about financial position, performance, and cash flows</p> Signup and view all the answers

What does equity information in financial statements include?

<p>Contributions by and distributions to owners (in their capacity as owners)</p> Signup and view all the answers

What do financial statements assist users in predicting?

<p>Entity's future cash flows and their timing and certainty</p> Signup and view all the answers

What type of information do financial statements provide about an entity's income and expenses?

<p>Information about gains, losses, income, and expenses</p> Signup and view all the answers

Study Notes

Ias 1 (2007) objectives and scope.

• The objective of IAS 1 (2007) is to ensure that an entity presents a faithful representation of its financial position, financial performance, and cash flows.

Application of IAS 1

• IAS 1 applies to all general purpose financial statements.

General Purpose Financial Statements

• General purpose financial statements aim to provide information about an entity's financial position, financial performance, and cash flows.

Assets in Financial Statements

• Assets in financial statements are resources controlled by the entity as a result of past events and from which future economic benefits are expected to flow.

Scope of IAS 1

• The scope of IAS 1 includes the overall considerations for the presentation of financial statements, guidelines for selecting and applying accounting policies, and the disclosure of accounting policies.

Objective of General Purpose Financial Statements

• The objective of general purpose financial statements is to provide financial information about an entity's financial position, financial performance, and cash flows that is useful to a wide range of users.

Equity Information

• Equity information in financial statements includes the entity's capital, reserves, and retained earnings.

Prediction of Future Cash Flows

• Financial statements assist users in predicting the entity's future cash flows and their timing.

Income and Expenses Information

• Financial statements provide information about an entity's income and expenses, including revenues, expenses, gains, and losses, to help users understand the entity's financial performance.

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Test your knowledge about the objective and requirements of IAS 1 (2007) which prescribes the basis for the presentation of general purpose financial statements, ensuring comparability and setting out overall requirements for their presentation.

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IAS 1 Presentation of Financial Statements

International accounting standard 1.

Overview of IAS 1

• Issued: in 1975; re-issued in 2007, followed by amendments
• Effective date: 1 January 2009
• Statement of financial position;
• Statement of profit or loss and other comprehensive income;
• Statement of changes in equity;
• Statement of cash flows;
• Notes with summary of significant accounting policies and other explanatory information
• fair presentation and compliance with IFRS;
• going concern;
• accrual basis of accounting;
• materiality and aggregation;
• offsetting;
• frequency of reporting;
• comparative information; and
• consistency of presentation.
• It sets the minimum requirements for the content of financial statements; their identification and structure.

Articles about IAS 1

• Summary of IAS 1 Presentation of Financial Statements
• How to write notes - this article gives a step-by-step guidance on writing the notes and also, some stories are included
• Current or Non-current? - this article will help you decide whether you should present the item as current or non-current
• IFRS for Banks and Financial Institutions - I recommend reading it if you work for a bank, because the structure of financial statements is different
• Profit or loss vs. Other Comprehensive Income - what's the difference?

Questions and Answers

• How to present the financial statements when going concern does NOT apply?
• How to classify expenses in profit or loss?
• How to present a loan with breached covenants? - this Q&A relates to current/non-current distinction
• How to deal with CAPEX threshold for your PPE? - this Q&A relates to materiality and its change during the reporting period
• Failed to comply with IFRS?
• How to present comparatives when the reporting period changes

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ACCA FR Chapter 3 Presentation of Financial Statements (IAS 1) Questions

Reader interactions.

January 20, 2023 at 1:47 pm

Can you please advise on where the interest paid and interest received should be recorded? Should they be recorded after PBIT in the P&L statement?

May 16, 2023 at 1:31 pm

they should be recorded after PBIT in P/L statement.

May 8, 2021 at 12:14 am

Is it possible to get practice questions where we actually prepare financial statements

May 8, 2021 at 9:21 am

Yes, you can find them in the revision kits that you are recommended to purchase.

October 15, 2022 at 10:07 pm

February 7, 2020 at 11:17 am

sir, can u please explain the answer of Q;1?

November 29, 2019 at 3:13 pm

Good day sir,

The first option in question one stated that the liability occured during the accounting period,so I thought it would be classified as a current liability.

But from the answer it is stating otherwise, please kindly explain further sir..thank you sir

October 19, 2022 at 3:49 am

The liability has arised during the current accounting period just ended. It is not stated that it is current liability or non-current liability. The question asks “not necessarilty” lead to rise in current liability.

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IAS 1 _ Presentation Financial Statement...

IAS 1 _ Presentation Financial Statements

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According to the purpose of the financial statements IAS01, there is further mention of whether the item on change in equity is true or false:

What are the most similar and complete points in VAS21 and IAS01 standards?

1. The basic principles

2. Going concerns

3. Accrual basis of accounting

4. Dividend

5. Offsetting

The information presented in the balance sheet VAS21 is not divided into many items as prescribed by IAS01.

What is the difference in the classification of Current Assets between IAS01 and VAS 21?

It expects to realise the asset, or intends to sell or consume it, in its normal operating cycle

It expects to realise the asset within twelve months after the reporting period

It holds the asset primarily for the purpose of trading

The asset is cash or a cash equivalent

IAS1 is required to present on the face of the statement of financial position as a separate classification for the following:

Current and non-current assets only

Current and non-current assets, Current and non-current liabilities

Current and non-current liabilities only

Between the IAS01 and VAS21 standards, which one has more flexibility?

Both A and B

According to IAS 1 Presentation of Financial Statements, which of the following does not have to be presented as a line item in the statement of financial position?

Investments accounted for using the equity method.

Assets and liabilities for the current tax.

Non-controlling interests, presented within equity.

The number of shares authorized, issued, and fully paid.

Which of the following is not included in a complete set of financial statements according to IAS 1 Presentation of Financial Statements?

A profit or loss statement

A balance sheet statement

Details of accounting policies adopted

Directors report.

Which of the following about comprehensive income is correct?

Comprehensive income is equal to profit or loss plus total other comprehensive income

Profit or loss is equal to comprehensive income plus total other comprehensive income

Comprehensive income is equal to profit or loss plus total other comprehensive income plus extraordinary items.

Total other comprehensive income is equal to comprehensive income plus profit or loss

According to the illustrative financial structure in IAS 1 (revised) Presentation of financial statements, dividends paid during the year should be disclosed in:

Statement of financial position

Statement of comprehensive income (statement of profit or loss)

Statement of changes in equity

None of these

IAS1 sets out rules on:

Form of financial statements

Content of financial statements

Both content and form of financial statements

Which of the following does not comprise a set of financial statements (IAS01)?

Statement of profit or loss and other comprehensive income, changes in equity and cash flow for the period

Statement of financial position as at the end of the period

Comparative information in respect of the preceding period and notes, comprising significant accounting policies and other explanatory information

Report of the entity’s sources of funding

Where are dividends according to VAS21 and IAS01 standards presented?

Dividends under VAS21 are presented in the notes to the statement and IAS01 in the statement of changes in equity or in the notes.

Dividends under VAS21 are presented in the statement of changes in equity or in the notes and IAS01 are presented in the notes to the report.

Dividends under VAS21 are presented in the financial statements and IAS01 are presented in the statement of changes in equity or in the notes

Both A and B are correct

Which of the following is a method of recognizing the value of the fixed asset under VAS21 assuming the enterprise is in going concerned?

Historical cost

Target price

Realizable value

Present value

According to IAS01, which companies report periodically:

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