1. IAS 1 Financial Statements

What does IAS 1 cover?

Presentation of general-purpose financial statements under IFRS.

What does SOFP mean?

Statement of Financial Position: assets, liabilities and equity at a date.

What does P/L mean?

Profit or loss: income minus expenses for the period.

What does OCI mean?

Other comprehensive income: certain gains/losses shown outside profit or loss.

What is SOCI?

Statement of profit or loss and other comprehensive income.

What is SCIE?

Statement of Changes in Equity: opening balances, movements and closing balances.

What are the main financial statements?

SOFP, profit or loss and OCI, SCIE, cash flow statement, and notes.

What are comparatives?

Previous-period figures supplied so users can compare results.

What identifies a statement?

Entity name, reporting period/date, currency and rounding level.

What is the accounting equation?

Assets = Liabilities + Equity.

Profit formula?

Profit = Income − Expenses.

Gross profit formula?

Gross profit = Sales − Cost of sales.

Net assets formula?

Net assets = Total assets − Total liabilities.

Closing equity formula?

Opening equity + total comprehensive income + owner contributions − distributions (plus/minus other transfers).

Where is PPE shown?

Usually as a non-current asset on the SOFP.

Where is a trade receivable shown?

Current asset in the SOFP, if expected to be realised in operating cycle/within 12 months.

Where is a trade payable shown?

Usually current liability on the SOFP.

Where is depreciation expense shown?

Profit or loss, as an expense.

Where does revaluation surplus normally go?

OCI and accumulated in equity's revaluation surplus, subject to IAS 16 reversal rules.

Normal balance of PPE?

Asset, normally Dr: Dr ↑ increases; Cr ↓ decreases.

Normal balance of loan payable?

Liability, normally Cr: Cr ↑ increases; Dr ↓ decreases.

Normal balance of income?

Normally Cr: Cr ↑ increases; Dr ↓ decreases.

Normal balance of expenses?

Normally Dr: Dr ↑ increases; Cr ↓ decreases.

What is an accounting policy note?

Explanation of the measurement and presentation methods the company uses.

What is a disclosure note for?

More detail needed to understand amounts in the statements.

Example: sales €80k, cost of sales €55k. Gross profit?

€80k − €55k = €25k.

Example: assets €150k, liabilities €85k. Equity?

€150k − €85k = €65k.

Record accrued expenses €2k: journal?

Dr Expense €2k ↑; Cr Accrual €2k ↑ liability. Cost incurred but unpaid.

Pay accrued expenses €2k: journal?

Dr Accrual €2k ↓ liability; Cr Bank €2k ↓ asset. Settles debt.