ACCA ACCA Financial Reporting Standards 3

Question 1

Under IAS 21, how are foreign currency monetary items translated at the balance sheet date?

Accepted Answer

At the closing (spot) rate at the balance sheet date

Answer

IAS 21 requires monetary items (such as receivables and payables in foreign currency) to be retranslated at the closing rate at each balance sheet date.

Question 2

What is the purpose of a 'statement of changes in equity' in IFRS financial statements?

Accepted Answer

To reconcile the opening and closing balances of all equity components

Answer

The statement of changes in equity reconciles the opening and closing balances for each component of equity, showing all movements including profit, other comprehensive income, and transactions with owners.

Question 3

Under IAS 8, what is the correct treatment when an entity changes an accounting policy?

Accepted Answer

Apply the change retrospectively, restating prior periods unless impracticable

Answer

IAS 8 requires that changes in accounting policy be applied retrospectively, restating comparative figures as if the new policy had always been applied, unless impracticable.

Question 4

Which IFRS standard addresses segment reporting, and what is the 'management approach' it requires?

Accepted Answer

IFRS 8; segments are based on how the chief operating decision maker reviews internal reports

Answer

IFRS 8 Operating Segments uses the management approach, requiring segments to be reported in the way that management monitors performance internally.

Question 5

Under IAS 10, which of the following is classified as an 'adjusting event after the reporting period'?

Accepted Answer

Discovery of a fraud that existed at the balance sheet date

Answer

Discovery of a fraud or error existing at the balance sheet date is an adjusting event, as it provides evidence of a condition that existed at the reporting date.

ACCA - Association of Chartered Certified Accountants Certification Practice Test

ACCA - Association of Chartered Certified Accountants Certification Practice Test

ACCA ACCA Financial Reporting Standards 3