IAS 1 follows the same format as all IASs: the begin with an objective, then discuss the Scope of the Standard after which all the provisions of the Standard follow. Finally, the effective date is stated and that may be followed by one or more appendices that give examples, illustrations, cross references and so on.

The solutions to the questions on this page are available to anyone who asks: just email me and I'll send them by return ... don't forget to tell me what you want!! Whilst I have prepared all of the solutions to these questions, I have used IAS materials for some of them and I can't put them here because to do so could infringe the IASB's copyrights.

The layout of this page is that I have worked my way through the Standard from start to finish exploring the most important paragraphs as I go. It will be most useful if you have the Standard in front of you as you work your way through this page.

Questions

1 What is the objective of IAS 1: Presentation of Financial Statements?

2 The scope of an IAS tells us, in general, how and when it should be applied:

(a) what, then, is the scope of IAS 1?
(b) in your answer, you should include the types of organisation to which it relates
(c) what does IAS 1 day about its applicability to non profit, government and other public sector enterprises?

3 (a) what is the objective of general purpose financial statements?
(b) in achieving the objective in part (a) of this question, what information does IAS 1 say that financial statements should provide?
(c) how does IAS 1 anticipate that the information discussed in parts (a) and (b) of this question will assist users of these financial statements?

4 Who is responsible for the preparation of an organisation's financial statements?

(a) the accountant and the bookkeeping team
(b) the board of directors
(c) the governing body
(d) (b) and/or (c)

5 (a) what does a "complete set of financial statements" include?
(b) what other information, in addition to that you list in your answer to part (a) of this question, are organisations encouraged to present "outside the financial statements"? Provide examples of the kinds of information this "other information" should include.

6 Select the best alternative from the four that follow: assume that you are reading the financial statements of IAS Ltd, what would you expect to read in the notes that follow those accounts if those accounts were prepared using the IASs?

(a) Financial statements should present fairly the financial position, financial performance and cash flows of an enterprise
(b) These financial statements have been prepared in accordance with International Accounting Standards
(c) These a financial statements have been prepared under the historical cost convention
(d) Both (b) and (c)

7 IAS 1 discusses the term "fair presentation" in relation to financial statements: provide two requirements that should ensure that financial statements are fairly presented.

8 What does IAS 1 say about the relevance and reliability of the information contained in financial statements?

9 What are accounting policies, as defined by IAS 1?

10 Name the six accounting policies that IAS 1 discusses in detail in connection with the fair presentation of financial statements.

11 Give an example of when an organisation is not entitled to assume that it is operating on the going concern basis.

12 Give two examples of how the accruals basis of accounting might work.

13 Discuss the materiality aspects of the following balance sheet extracts.

KSSG Ltd	31Dec 20X1	31 Dec 20X0
Consolidated balance sheet	$	$
Non Current assets
Intangible Assets	4	4
Property, Plant and Equipment	1020865	1864674
Investments in securities	0	0
Total Non Current Assets	1020869	1864678
Current assets
Inventories	0	0
Trade and Other Receivables	1889474	2000172
Investments in Securities	23706582	32114215
Bank Balances and Cash	1161262	419513
Total Current Assets	26757318	34533900
Total Assets	27778187	36398578

14 Discuss the accounting policy that has been breached by the balance sheet below.

KSSG Ltd	31Dec 20X1	31 Dec 20X0
Consolidated balance sheet	$	$
Total Non Current Assets	1020869	1864678
Current assets
Total Current Assets	26757318	34533900
Total Assets	27778187	36398578

15 Give an example of when offsetting in financial statements is

(a) allowable
(b) not allowable

16 What does IAS 1 say about the identification of the components of the financial statements?

17 An organisation has the choice of whether to present non current and current assets as separate classifications in the balance sheet: True or False?

18 An enterprise has the choice of whether to present assets and liabilities in order of their liquidity (or in reverse order of liquidity) without a current/non current distinction: True or False?

19 Is the notion twelve months from the balance sheet date still of significance?

20 IAS 1 specifies the minimum line items that should be presented on the face of a balance sheet: what are those items?

21 Summarise the disclosure requirements relating to issued share capital and reserves, the following disclosures are required

22 What are the minimum items on the face of the income statement should include

23 State how expenses should be classified on the face of the income statement or in the notes to it.

24 What does IAS 1 say about the presentation of a Statement of Changes in Equity in the financial statements?

25 What does IAS 1 say about cash flow statements?

26 What are the main requirements in connection with notes to the financial statements according to IAS 1?

27 What are the main requirements in connection with presentation of accounting policies according to IAS 1?

28 In addition to the notes and the accounting policy statements, what else should an organisation disclose, if not disclosed elsewhere in the financial statements?

Questions devised and prepared by
Duncan Williamson
6 August 2002

References

www.iasplus.com
SJ Gray and BE Needles (1999) Financial Accounting: a global approach
Houghton Mifflin Company

© Duncan Williamson
11 August 2002