MFRS 108 and MFRS 110

MFRS 110 requires that financial statements should be adjusted to take account of any events occurring between the end of the reporting period and the date when the financial statements are authorised for issue. True or False?

• True

• False

A company is preparing its financial statements for the year to 31 March 2016. Assuming that each of the following events occurs after 31 March 2016 but before the financial statements are authorised for issue, which one of them should be classified as a NON-ADJUSTING event?

• The bankruptcy of a customer who owed a substantial amount to the company at 31 March 2016

• The discovery of a major fraud that had occurred in January 2016

• The sale of inventories which were held on 31 March 2016

• A change in tax rates that is announced in April 2016 and which has a material impact on the tax liability for the year to 31 March 2016

Although the accounting treatment of inventories is prescribed by MFRS 102 Inventories, a company may also need to apply MFRS 110 Events After the Reporting Period when determining the inventories figure which should be shown in its financial statements. True or False?

• True

• False

The term "accounting policies" refers to:

• The accounting concepts and conventions adopted by an entity

• The accounting principles applied by an entity

• The measurement bases used by an entity

• All of the above

An entity may change one of its accounting policies:

• Never

• If this would reduce the cost of preparing the financial statements

• If this would result in the provision of reliable and more relevant information

• Whenever it wishes to do so

A change in accounting policy which does not result from the initial application of an international standard must normally be accounted for:

• Retrospectively

• Prospectively unless it is impracticable to do so

• Prospectively

• Either retrospectively or prospectively

A change in an accounting estimate should be accounted for:

• Prospectively

• Either retrospectively or prospectively

• Retrospectively unless it is impracticable to do so

• Retrospectively

Prior period errors could be caused by:

• Mathematical errors

• Mistakes in applying accounting policies

• Fraud

• Any of the above

A material prior period error should be corrected:

• Prospectively unless it is impracticable to do so

• Either retrospectively or prospectively

• Retrospectively

• Prospectively

An entity's financial statements provide comparative figures for the previous five accounting periods. If the entity accounts for an item retrospectively, then:

• Comparative figures for the previous five accounting periods are not restated in any circumstances

• Comparative figures for all of the previous five accounting periods may need to be restated

• The entity may choose whether or not to restate comparative figures

• Comparative figures are restated for the prior accounting period but never for the four previous accounting periods