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ACCA Financial Reporting Standards Flashcards

6 cards from real ACCA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 ACCA Financial Reporting Standards flashcards as text

  1. Under IFRS 9, into which three categories are financial assets classified?

    Answer: Amortized cost, fair value through other comprehensive income (FVOCI), and fair value through profit or loss (FVTPL)

    IFRS 9 classifies financial assets into amortized cost, FVOCI, and FVTPL based on the entity's business model and the contractual cash flow characteristics.

  2. What does IAS 19 govern in financial reporting?

    Answer: Employee benefits including pensions

    IAS 19 Employee Benefits prescribes how companies account for and disclose employee benefits, including short-term benefits, post-employment benefits, and pensions.

  3. Under IFRS 3, how should goodwill arising on a business combination be accounted for?

    Answer: Recognized as an asset and tested annually for impairment

    IFRS 3 requires goodwill to be recognized as an intangible asset and subjected to annual impairment testing rather than systematic amortization.

  4. What is the 'conceptual framework' in IFRS and what is its primary purpose?

    Answer: A guide that underpins the development of IFRS standards and assists preparers in applying them

    The IFRS Conceptual Framework provides the underlying concepts that guide the IASB in developing standards and helps preparers develop consistent accounting policies.

  5. Under IAS 37, when should a provision be recognized on the balance sheet?

    Answer: When there is a present obligation, probable outflow of resources, and reliable estimate

    IAS 37 requires a provision to be recognized only when there is a present obligation (legal or constructive), a probable outflow of economic benefits, and a reliable estimate can be made.

  6. What is the 'effective interest method' used for under IFRS financial reporting?

    Answer: Amortizing the premium or discount on financial instruments to reflect true interest cost

    The effective interest method allocates interest income or expense over the relevant period, spreading any discount or premium on a financial instrument at a constant rate.