ACCOUNTING- PAS 8

16問 • 2年前

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It is applied in selecting and applying accounting policies, accounting for changes in estimates and reflecting corrections of prior period errors

PAS 8- ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES AND ERRORS

These are the specific principles, bases, conventions, rules and practices applied by an entity in preparing and presenting financial statements.

ACCOUNTING POLICIES

It is an adjustment of the carrying amount of an asset or liability, or related expense, resulting from reassessing the expected future benefits and obligations associated with that asset or liability.

A CHANGE IN ACCOUNTING ESTIMATE

Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.

MATERIALITY

These are omissions from, and misstatements in, an entity's financial statements for one or more prior periods arising from a failure to use, or misuse of, reliable information that was available and could reasonably be expected to have been obtained and taken into account in preparing those statements. Such errors result from mathematical mistakes, mistakes in applying accounting policies, oversights or misinterpretations of facts, and fraud.

PRIOR PERIOD ERRORS

The objective of PAS 8 is to prescribe the criteria for selecting and changing ACCOUNTING POLICIES, changes in ACCOUNTING ESTIMATES and CORRECTION OF ERRORS to enhance relevance, reliability and comparability of the financial statements of an entity over time as well as with the financial statements of other entities.

TRUE

When a standard specifically applies to a transaction, the accounting policy applied to an affected account shall be determined by applying the standard. In the absence of a standard that applies to a transaction, management shall use its intuition in developing and applying accounting policy that is relevant and reliable.

FALSE

An entity shall change an accounting policy if the change: I. Is required by a standard II. Is required by a company III. Results in the FS providing more relevant and reliable financial information IV. Results in the FS providing more irrelevant and reliable financial information

I,III

A change in accounting policy that is required by a ______ shall be applied in accordance with the transitional provisions therein.

STANDARD

If a standard contains no transitional provisions or if an accounting policy is changed voluntarily, the change shall be applied retrospectively (as if the policy had always been applied) as adjustment to opening balance of each affected component of equity (e.g. retained earnings) for the earliest prior period presented.

TRUE

For purposes of PAS 8, the following are NOT considered as changes in accounting policies:

Application of accounting policies for events that differ in substance from those previously occurring, Application of a new accounting policy for transactions that did not occur previously or were immaterial

When it is impracticable for an to apply to apply a new accounting policy restrospectively, the entity applies the new policy prospectively from the start of the earliest period practicable.

TRUE

When an entity has not applied a new standard that has been issued but is not yet effective, the entity shall disclose this fact, and the reasonably estimable information relevant to assessing the possible impact that application of the new standard will have on the entity’s financial statement in the period of initial application.

TRUE

The effect of a change in an accounting estimate shall be recognized retrospectively by including it in profit or loss during the period of the change (if the change affects that period only) or the period of the change and future periods (if the change affects both).

FALSE

Examples of Changes in Estimates include:

Bad debts and inventory obsolescence, Fair value of financial assets or financial liabilities, Useful lives of depreciable assets, Provision for warranty obligations

An entity shall correct material prior period errors prospectively as an adjustment to the opening balances of retained earnings and affected assets and liabilities.

FALSE

VITMOLOGY-PPT2

Anndrea S. Galupo · 22問 · 1年前

VITMOLOGY-PPT2