(AI-Generated) Presentation of Financial Statements

C) To provide useful information about the financial position, performance, and cash flows of an entity

What is the primary objective of financial statements?

A) To assess tax liability
B) To evaluate internal performance
C) To provide useful information about the financial position, performance, and cash flows of an entity
D) To communicate only with investors

B) Statement of Financial Position

Which of the following is a required component of general-purpose financial statements?

A) Annual report
B) Statement of Financial Position
C) Audit report
D) Management commentary

B) Trade Receivables

Which of the following is classified as a current asset?

A) Property, Plant, and Equipment
B) Trade Receivables
C) Deferred Tax Asset
D) Goodwill

C) At least annually

How often must financial statements be presented, according to PAS 1?

A) Every month
B) Every quarter
C) At least annually
D) Every two years

A) Long-term Debt

Which of the following is considered a non-current liability?

A) Long-term Debt
B) Trade Payables
C) Short-term Borrowing
D) Current Tax Liability

B) Components of profit or loss and other comprehensive income

The statement of comprehensive income includes:

A) Cash inflows and outflows
B) Components of profit or loss and other comprehensive income
C) Only profit or loss
D) Equity contributions by owners

B) Common Stock

Which of the following is classified as equity in a corporation?

A) Long-term debt
B) Common Stock
C) Accounts payable
D) Inventory

D) Revaluation surplus

Which of the following OCI items will NOT be reclassified to profit or loss?

A) Unrealized gain or loss on debt investments
B) Gain or loss from translation of financial statements of a foreign operation
C) Unrealized gain or loss from derivative contracts
D) Revaluation surplus

A) True

The statement of financial position must include current and non-current assets and liabilities

A) True
B) False

B) False

PAS 1 requires that financial statements must be presented only annually, without any exceptions

A) True
B) False

B) False

It depends on conditions such as refinancing options

Liabilities that are settled within 12 months must always be classified as current

A) True
B) False

B) False

The statement of comprehensive income includes profit/loss and other comprehensive income

The income statement and the statement of comprehensive income are the same

A) True
B) False

A) True

The statement of changes in equity shows the movements in shareholders' equity over a period

A) True
B) False

B) False

They are reported in other comprehensive income

Unrealized gains and losses on equity investments classified as fair value through OCI are reported in the income statement

A) True
B) False

Statement of Cash Flows

Identify the financial statement used to report an entity's operating, investing, and financing activities

Income Statement

Name the term used to describe the financial performance of an entity over a period of time

Statement of Financial Position

Which type of asset is described as an economic resource controlled by an entity as a result of past events?

Statement of Financial Position

What is the formal name for the financial statement that shows the entity’s financial position at a point in time?

C) Statement of Tax Liability

Which of the following is NOT a component of a complete set of financial statements according to PAS 1?

A) Statement of Financial Position
B) Income Statement
C) Statement of Tax Liability
D) Statement of Cash Flows

D) Deferred Tax Asset

Which of the following is classified as a non-current asset?

A) Cash and Cash Equivalents
B) Trade Receivables
C) Prepaid Expenses
D) Deferred Tax Asset

B) It will be settled within 12 months

An entity's liability is classified as current if:

A) It will be settled in the next 5 years
B) It will be settled within 12 months
C) It is related to the entity’s investments
D) It is related to the entity’s owners

B) Current assets are usually listed in order of liquidity

Which statement is TRUE about the classification of assets on the Statement of Financial Position?

A) Current assets are always listed alphabetically
B) Current assets are usually listed in order of liquidity
C) Non-current assets are always listed first
D) Liabilities are listed before assets

A) Unrealized gains on financial instruments

Which of the following is included in Other Comprehensive Income (OCI)?

A) Unrealized gains on financial instruments
B) Revenues from sales
C) Dividends paid to shareholders
D) Cost of goods sold

D) One year

What is the minimum period of time that financial statements should cover according to PAS 1?

A) One month
B) One quarter
C) Five years
D) One year

B) Common Stock

Which component of equity includes amounts paid by shareholders in exchange for shares?

A) Retained Earnings
B) Common Stock
C) Long-term Debt
D) Accounts Payable

B) Liquidity

An entity shall present assets and liabilities in order of:

A) Increasing cost
B) Liquidity
C) Alphabetical order
D) Historical cost

C) Statement of Cash Flows

Which of the following financial statements is NOT required by PAS 1?

A) Statement of Financial Position
B) Statement of Changes in Equity
C) Statement of Cash Flows
D) Statement of Dividends

B) To explain items in the financial statements

What is the purpose of the notes to financial statements?

A) To detail the entity's profits
B) To explain items in the financial statements
C) To report management’s goals
D) To state the company’s mission

B) Retained Earnings

Which of the following is considered a "component of equity"?

A) Borrowings
B) Retained Earnings
C) Trade Payables
D) Prepaid Expenses

C) Statement of Comprehensive Income

Under PAS 1, which statement presents the comprehensive financial performance of an entity over a period?

A) Statement of Changes in Equity
B) Income Statement
C) Statement of Comprehensive Income
D) Statement of Financial Position

A) Functional classification

Which of the following is a classification of expenses in the income statement according to PAS 1?

A) Functional classification
B) Geographic classification
C) Contractual classification
D) Segmental classification

C) Trade Payables

Which of the following is NOT part of equity?

A) Retained Earnings
B) Share Capital
C) Trade Payables
D) Revaluation Surplus

D) All of the above

The line items in the income statement presented based on the function of expense include:

A) Cost of Goods Sold
B) Selling and Distribution Expenses
C) General and Administrative Expenses
D) All of the above

B) Long-term Assets

What is the term used for assets that are expected to be realized in more than 12 months?

A) Current Assets
B) Long-term Assets
C) Intangible Assets
D) Short-term Investments

A) Statement of Changes in Equity

Which of the following financial statements shows the movements in shareholders' equity?

A) Statement of Changes in Equity
B) Income Statement
C) Statement of Financial Position
D) Statement of Cash Flows

A) Extraordinary items

PAS 1 prohibits the presentation of which of the following on the income statement or the notes to the accounts?

A) Extraordinary items
B) Comprehensive income
C) Income taxes
D) Revenue

C) Non-current liabilities

Deferred tax liabilities are typically classified as:

A) Current liabilities
B) Current assets
C) Non-current liabilities
D) Equity

B) Foreign currency translation adjustments

Which of the following is considered part of Other Comprehensive Income (OCI)?

A) Interest income
B) Foreign currency translation adjustments
C) Dividend income
D) Cost of sales

C) Owner's equity

In a proprietorship, equity is reported as:

A) Shareholders' equity
B) Partners' equity
C) Owner's equity
D) Common stock

B) Accounts payable

Which of the following is an example of a current liability?

A) Mortgage payable
B) Accounts payable
C) Deferred tax liability
D) Long-term debt

D) Bank deposits

Which is NOT part of the minimum line items required on the statement of financial position?

A) Property, plant, and equipment
B) Inventory
C) Income taxes payable
D) Bank deposits

B) Income and expenses must be reported separately

How should income and expenses be reported according to PAS 1?

A) Income and expenses must be reported net of each other
B) Income and expenses must be reported separately
C) Income must be reported, and expenses omitted
D)/ Expenses must be reported first

A) True

Non-current liabilities include obligations that are not due for settlement within 12 months

A) True
B) False

B) False

PAS 1 allows two options: a single statement or separate income and OCI statements

Under PAS 1, an entity must always present a single statement of comprehensive income

A) True
B) False

B) False

They are settled within 12 months or the operating cycle, whichever is longer

Current liabilities must always be settled within one operating cycle.

A) True
B) False

A) True

A liability with a maturity of 15 months can be classified as current if the entity holds it for trading purposes

A) True
B) False