Financial Reporting Flashcards
6 cards from real ACA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Financial Reporting flashcards as text
Under FRS 102, a small entity is one that satisfies two of three conditions including turnover not exceeding:
Answer: £10.2 million
Under the Companies Act 2006 (as amended), a small company qualifies if it meets two of: turnover ≤£10.2m, gross assets ≤£5.1m, and employees ≤50. FRS 102 Section 1A is then available.
Under IFRS, an entity changes its accounting policy only when:
Answer: Required by a new IFRS or to give more reliable and relevant information
IAS 8 permits a voluntary change in accounting policy only when it results in more reliable and relevant information; mandatory changes are required when a new or amended standard requires them.
Under IAS 37, the best estimate used to measure a provision is:
Answer: The expected value or most likely outcome, considering all possible results
The best estimate is the amount an entity would rationally pay to settle the obligation at the reporting date — using the most likely outcome for a single obligation or expected value for a large population.
Retained earnings in a consolidated statement of equity represent:
Answer: The parent's retained earnings plus its share of post-acquisition retained earnings of subsidiaries
Consolidated retained earnings include the parent's own retained earnings plus the parent's share of post-acquisition retained earnings and losses of all subsidiaries.
Under IAS 10, dividends declared after the reporting date are:
Answer: Disclosed in the notes but not recognised as a liability
Under IAS 10, dividends declared after the reporting date are non-adjusting events; they do not meet the definition of a liability at year end and are only disclosed in the notes if material.
Under IFRS 16, the lessor classifies leases as finance or operating based on:
Answer: Whether substantially all risks and rewards of ownership are transferred to the lessee
For lessors (unlike lessees), the finance vs operating distinction remains under IFRS 16. A finance lease transfers substantially all risks and rewards of ownership to the lessee; an operating lease does not.