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Hello sir, please help me
Which of the following statements about the financial statements of limited liability companies are
correct according to International Financial Reporting Standards?1 In preparing a statement of cash flows, either the direct or the indirect method may be used.
Both lead to the same figure for net cash from operating activities.
2 Loan notes can be classified as current or non-current liabilities.
3 Financial statements must disclose a company’s total expense for depreciation, if material.
4 A company must disclose by note details of all adjusting events allowed for in the financial
statements.
A 1, 2 and 3 only
B 2 and 4 only
C 3 and 4 only
D All four itemsWhy is variant D not correct ?
Whould you please answer mine second question too?
Which of the following statements about limited liability companies’ accounting is/are correct?
1 A revaluation surplus arises when a non-current asset is sold at a profit.
2 The authorised share capital of a company is the maximum nominal value of shares and loan
notes the company may issue.
3 IAS 10 Events after the reporting period requires all non-adjusting events to be disclosed in the
notes to the financial statements.
A 1 and 2 only
B 2 only
C 3 only
D None of the statements are correctWhy is variant D not the right answer for this question? (PS:at the BPP learning book it says that variant C is answer of the question, but i dont agree with this)
First question – adjusting events are adjusted for in the statements, there is no need for a note. It is only non-adjusting events for which there is a note (if they are material).
Second question: non-adjusting events are disclosed in the notes – see my answer to your first question 🙂
Excuse me sir, but in my second question it says that “all” non adjusting events , actually as you saying non adjusting events are disclosed in a note if they are material, so in this question right answer is D, right?
Sir, would you please answer my other question?
Viola has an accounting year-end of 31 January 20X4. Which of the following events, if they occurred before the financial statements were approved, would be classified as adjusting events in accordance with IAS 10 Events after the Reporting Period?
(1) Viola paid an equity dividend of $10,000 on 28 February 20X4. The dividend had been proposed by the directors on 20 January 20X4.
(2) Notification of a compensation claim from a customer was received on 15 February 20X4 which related to a faulty product sold by Viola in January 20X4.
(3) Viola received notification on 5 February 20X4 that a major credit customer was insolvent.
A (1), (2) and (3) are adjusting events
B (2) and (3) are adjusting events
C (1) and (3) are adjusting events
D (2) only is an adjusting eventViola paid an equity dividend of $10,000 on 28 February 20X4. The dividend had been proposed by the directors on 20 January 20X4.
Is this event adjusting or non adjusting?
Strictly you are correct in that non-adjusting events only need disclosing if material.
Regarding your other question, the dividend is non-adjusting – proposed dividends do not appear in the financial statements. They only appear in the statements for the year in which they are actually paid.
This is explained in my free lectures on limited companies. The lectures are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well.
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