ACCA Financial Reporting > Financial Reporting > Flashcards

Financial Reporting Flashcards

(78 cards)

Study These Flashcards
1
Q

What does the change between opening and closing receivables represent?

A

Adjustment from reported revenue to net cash inflow from sales

An increase in receivables is a deduction from reported profit, while a decrease is an addition.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

An increase in receivables is a deduction from which financial metric?

A

Reported profit

Less sales from the previous period are being received in cash than are being carried forward.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

A decrease in receivables is an addition to which financial metric?

A

Reported profit

This indicates more cash is being collected from sales than previously recorded.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What does inventory at the reporting date represent?

A

A purchase not charged against current profits

It indicates a cash outflow due to cash spent or payables incurred.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What should be calculated to adjust profit regarding inventory?

A

Movement in inventories between two reporting dates

This includes adjustments to payables for expenses not charged in the statement of profit or loss.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

An increase in payables between two reporting dates is an addition to which financial metric?

A

Reported profit

This reflects that purchases have been made but not yet paid for.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

A decrease in payables is a deduction from which financial metric?

A

Reported profit

This indicates that cash has been paid out for previous purchases.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Cash flows from operating activities typically include which three items?

A
  • Cash generated from operations
  • Interest paid
  • Tax paid

These components are essential for calculating net cash from operating activities.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What are the components of investing cash flows?

A
  • Cash paid for property, plant, and equipment
  • Cash received on the sale of property, plant, and equipment
  • Cash paid for investments
  • Dividends received

These reflect the cash transactions related to long-term assets.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What do financing cash flows comprise?

A
  • Receipts from issuing shares
  • Receipts from long-term borrowings
  • Repayments of amounts borrowed
  • Capital element of lease rental payments

These transactions involve cash movements related to financing activities.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

True or false: Dividends paid are shown as part of operating activities.

A

FALSE

Dividends paid are typically shown under financing activities.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is the profit before tax for Jack plc for the year to 31 March 20X7?

A

536

This is calculated before accounting for taxation.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is the net cash from operating activities for Jack plc?

A

647

This figure is derived after adjustments for interest and tax paid.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is the total comprehensive income for Jack plc for the year ended 31 March 20X7?

A

529

This includes profit for the year and other comprehensive income.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What was the cash and cash equivalents at the beginning of the period for Jack plc?

A

34

This figure is used to calculate the net increase/decrease in cash and cash equivalents.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What does the government grant received amount to for Jack plc?

A

110

This is included in the cash from investing activities.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is the environmental provision for Jack plc?

A

76

This represents an estimate of the cost of environmental restoration related to mining activities.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is the issue of ordinary shares amount for Jack plc?

A

120

This reflects cash proceeds from the share issue during the year.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What is the critical safety rule regarding moving a victim who may have injured their spine?

A

Never move them unless their current location presents an immediate danger to their life

Moving a victim with a potential spinal injury may cause further harm, such as permanent paralyzation.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

In the statement of cash flows, what should be included if an item is a non-cash item?

A

Include it on the reconciliation

Non-cash items do not affect cash flow directly but are important for understanding overall financial health.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What are the current assets listed in the financial statements of Hollywood as of 30 September 20X3?

A
  • Inventory: 420
  • Trade receivables: 390
  • Interest receivable: 4
  • Investments: 50
  • Cash in bank: 75
  • Cash in hand: 7

These assets are crucial for assessing liquidity and operational efficiency.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What was the profit for the year for Hollywood as of 30 September 20X3?

A

186

This figure reflects the company’s performance after all expenses, including taxes, have been deducted.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

On what date was the Declaration of Independence officially adopted?

A

July 4, 1776

This document marked the formal separation of the American colonies from Great Britain.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

What does a Green flag indicate at the beach?

A

Safe, open conditions for swimming

Beach flags are used to communicate water safety conditions to the public.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
What is the **total assets** value for Hollywood as of 30 September 20X3?
1,580 ## Footnote Total assets reflect the overall financial position of the company.
26
True or false: A **negative overall cash flow** is always a bad thing.
FALSE ## Footnote A negative cash flow could indicate investment in growth, which may be beneficial in the long term.
27
What should be compared to assess the **sustainability** of dividend and interest payments?
Cash generated from trading operations ## Footnote If operations cannot cover these payments, it may indicate financial distress.
28
What is the **impact of depreciation** on cash flow?
It reduces profit but does not affect cash flow directly ## Footnote Depreciation is a non-cash expense that reflects the wearing out of assets over time.
29
What does it indicate if **investment > depreciation**?
The company is investing at a greater rate than its current assets are wearing out, suggesting expansion ## Footnote This is a positive sign for future growth.
30
What is the **cash flow point of view** for an item of plant purchased for $10,000?
Outflow of cash in year 1 of $10,000 and no further outflows in the next four years ## Footnote This reflects the immediate cash impact of the purchase.
31
What does a **positive cash flow** from operating activities indicate?
Sustainable cash generation from core business operations ## Footnote This is crucial for the long-term viability of the company.
32
What is the **total comprehensive income** for Hollywood for the year ended 30 September 20X3?
236 ## Footnote This includes profit for the year and other comprehensive income such as gains on property revaluation.
33
What should be reviewed in the **statement of cash flows** after preparation?
* Cash generation from trading operations * Dividend and interest payments * Capital expenditure and sales * Management of financing * Net cash flow ## Footnote This review helps assess the company's financial health and future cash position.
34
What is the **impact of high profits and low cash generation**?
It may indicate overtrading ## Footnote This situation can lead to liquidity issues despite reported profitability.
35
What was the **present value of the lease payments** at the inception of the lease for CFQ?
$720,000 ## Footnote This amount reflects the financial commitment made by CFQ for property, plant, and equipment through a lease arrangement.
36
On what date did CFQ make a **1 for 5 bonus issue**?
11 June 20X0 ## Footnote This bonus issue utilized share premium.
37
What was the **carrying amount** of the plant sold by CFQ during 20X1?
$60 million ## Footnote CFQ sold the plant for $45 million, resulting in a loss.
38
What was the **depreciation** of property, plant, and equipment included in CFQ's statement of profit or loss?
$120 million ## Footnote Depreciation reflects the allocation of the cost of tangible assets over their useful lives.
39
What was the **loss on FVPL investments** reported by CFQ?
$21 million ## Footnote This loss indicates a decrease in the fair value of financial assets classified as fair value through profit or loss.
40
What was the **amortisation of development costs** reported by CFQ?
$8 million ## Footnote Amortisation reflects the gradual write-off of intangible assets over their useful life.
41
What does the **cash flows from investing activities** section of CFQ's statement of cash flows show?
Indicates cash spent on or received from investments in property, plant, and equipment ## Footnote This section highlights CFQ's investment strategy and asset management.
42
What was the **profit after tax** for CFQ during the year?
$2.1 million ## Footnote This figure represents the net income after all expenses, including taxes, have been deducted.
43
What was the **carrying amount** of property, plant, and equipment for CFQ as of 31 March 20X1?
$635,000 ## Footnote This amount reflects the net book value of tangible fixed assets.
44
What was the **carrying amount** of FVPL investments for CFQ as of 31 March 20X1?
$93,000 ## Footnote This amount indicates the value of financial assets measured at fair value through profit or loss.
45
What was the **carrying amount** of development costs for CFQ as of 31 March 20X1?
$29,000 ## Footnote This amount represents the costs incurred for developing intangible assets.
46
What was the **tax paid** by Poochie Co for the year ended 31 March 20X1?
(1,070) ## Footnote This figure indicates the cash outflow related to income tax obligations.
47
What was the **purchase of property, plant and equipment** for Poochie Co?
(980) ## Footnote This amount reflects the cash outflow for acquiring tangible fixed assets.
48
What were the **proceeds of share issue** for Poochie Co?
850 ## Footnote This amount indicates cash inflow from issuing new shares.
49
What was the **dividend paid** by Poochie Co?
(740) ## Footnote This figure represents the cash outflow to shareholders as dividends.
50
What was the **repayment of lease liability** for Poochie Co?
(185) ## Footnote This amount reflects the cash outflow related to lease obligations.
51
What is included in the **cash flows from investing activities**?
* Purchase of property, plant and equipment * Proceeds from sale of property, plant and equipment * Interest received * Dividends received ## Footnote This section summarizes cash transactions related to investments.
52
What are the **operating activities** in the statement of cash flows?
* Cash generated from operations * Interest paid * Taxes paid ## Footnote This section reflects cash flows from the core business operations.
53
What are the **financing activities** in the statement of cash flows?
* Share issues * Loan note transactions * Finance lease payments * Dividends paid ## Footnote This section summarizes cash flows related to financing the business.
54
What are the **investing activities** in the statement of cash flows?
* PPE purchases and sales * Interest received * Dividends received ## Footnote This section reflects cash flows related to the acquisition and disposal of long-term assets.
55
What is the definition of **cash equivalents**?
Short-term, highly-liquid investments that are readily convertible into known amounts of cash and are subject to an insignificant risk of changes in value ## Footnote Cash equivalents are included in the total cash and cash equivalents in the statement of cash flows.
56
What is the **definition** of a **parent** according to IFRS 10?
An entity that controls one or more entities ## Footnote This definition is crucial for understanding the relationship in consolidated financial statements.
57
What is the **definition** of a **subsidiary** according to IFRS 10?
An entity that is controlled by another entity (the parent) ## Footnote This highlights the hierarchical relationship in corporate structures.
58
What does **control of an investee** mean according to IFRS 10?
An investor controls an investee when: * Exposed to variable returns * Has the ability to affect those returns through power over the investee ## Footnote This definition outlines the criteria for control in financial reporting.
59
When is a group required to prepare **consolidated financial statements** according to IFRS 10?
When the parent company has control over the subsidiary, usually established by ownership of more than 50% of voting power ## Footnote Control is a key factor in determining the necessity of consolidation.
60
What is the **single economic entity concept** in the context of consolidated financial statements?
The purpose is to: * Present financial information as a single economic unit * Show economic resources controlled by the group * Show obligations of the group * Show results achieved with resources ## Footnote This concept emphasizes the economic reality over legal form.
61
What is the **key principle** underlying group accounts?
The need to reflect the **economic substance** of the relationship ## Footnote This principle guides the preparation of consolidated financial statements.
62
What are the **three IFRS Accounting Standards** relevant to the preparation of consolidated financial statements?
* IFRS 3 Business Combinations * IFRS 10 Consolidated Financial Statements * IAS 28 Investments in Associates and Joint Ventures ## Footnote These standards provide the framework for consolidation practices.
63
What must be removed when preparing consolidated financial statements?
Intra-group transactions ## Footnote This ensures that no income, expenses, assets, or liabilities from transactions within the group are included.
64
True or false: A **parent** company can manage a **subsidiary** as if it were merely a department of the parent.
TRUE ## Footnote This reflects the control that a parent company has over its subsidiary.
65
What does the **group concept** imply about the legal status of companies?
Every company is a separate entity, but economically they may not be ## Footnote This highlights the distinction between legal and economic perspectives in financial reporting.
66
What is the **objective** of consolidated financial statements?
To present the financial position and results of the group as a single economic unit ## Footnote This objective is essential for stakeholders to understand the overall performance of the group.
67
What is the definition of **control of an investee** according to IFRS 10?
An investor controls an investee when the investor is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. ## Footnote This definition outlines the relationship between an investor and an investee in terms of financial reporting.
68
When should **consolidated financial statements** be prepared according to IFRS 10?
When the parent company has control over the subsidiary, usually established by ownership of more than 50% of voting power. ## Footnote Control is the sole basis for consolidation as defined by IFRS 10.
69
What are the **three elements** that comprise control as identified by IFRS 10?
* Power over the investee * Exposure or rights to variable returns * Ability to use power to affect returns ## Footnote These elements must be present for an investor to consolidate an investee.
70
True or false: IFRS 10 adopts a **principles-based approach** to determining control.
TRUE ## Footnote This approach may require the exercise of judgement and aims for consistent judgements in financial reporting.
71
What should investors periodically consider regarding their **control over an investee**?
Whether control has been gained or lost. ## Footnote A range of circumstances may need to be considered in this determination.
72
List some circumstances that may indicate an investor has **power over an investee**.
* Exercise of majority voting rights * Contractual arrangements with other parties * Potential voting rights ## Footnote These factors can influence the assessment of control.
73
Under what conditions is a parent **not required** to present consolidated financial statements?
* Wholly owned subsidiary * Partially-owned subsidiary with informed owners * Debt or equity instruments not traded publicly * No filing of financial statements with regulatory bodies * Ultimate parent produces compliant consolidated statements ## Footnote These exemptions are outlined in IFRS 10.
74
What disclosures are required by **IAS 27 Separate Financial Statements** when exemption from preparation is permitted?
* Fact that consolidated financial statements have not been presented * List of significant investments with details * Bases on which those investments have been accounted for ## Footnote These disclosures ensure transparency in financial reporting.
75
Name some **reasons** a parent company may wish to exclude a subsidiary from consolidation.
* Poor performance * Poor financial position * Differing activities from the group ## Footnote These reasons are not permitted under IFRS Accounting Standards.
76
What is the accounting treatment for a **subsidiary held for resale**?
Held as current asset investment at the lower of carrying amount and fair value less costs to sell. ## Footnote This treatment reflects the intention to sell rather than maintain control.
77
What must be done if a subsidiary meets the criteria to be classified as **‘held for sale’**?
It must still be included in the consolidation but accounted for in accordance with IFRS 5. ## Footnote The parent's interest will be presented separately on the consolidated statement.
78
How should a parent company handle **materiality** when considering consolidation?
Review each subsidiary individually and collectively from year to year. ## Footnote Ideally, all controlled subsidiaries should be consolidated in all accounting periods.
ACCA Financial Reporting
flashcards
Decks in class (2)
# Cards
Brainscape helps you reach your goals faster, through stronger study habits.
© 2026 Bold Learning Solutions. Terms and Conditions