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
Under IAS 21, how are foreign currency monetary items translated at the balance sheet date?
Answer: At the closing (spot) rate at the balance sheet date
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.
What is the purpose of a 'statement of changes in equity' in IFRS financial statements?
Answer: To reconcile the opening and closing balances of all equity components
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.
Under IAS 8, what is the correct treatment when an entity changes an accounting policy?
Answer: Apply the change retrospectively, restating prior periods unless impracticable
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.
Which IFRS standard addresses segment reporting, and what is the 'management approach' it requires?
Answer: IFRS 8; segments are based on how the chief operating decision maker reviews internal reports
IFRS 8 Operating Segments uses the management approach, requiring segments to be reported in the way that management monitors performance internally.
Under IAS 10, which of the following is classified as an 'adjusting event after the reporting period'?
Answer: Discovery of a fraud that existed at the balance sheet date
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.
What is the 'fair value hierarchy' under IFRS 13, and which level represents the most reliable fair value inputs?
Answer: Level 1 — quoted prices in active markets for identical assets
IFRS 13 establishes a three-level hierarchy for fair value measurement; Level 1 (quoted market prices) is the most reliable as it uses observable market data directly.