IFRS, SINGLE ENTRY Previous Questions with Answers

PREVIOUS QUESTIONS AND ANSWERS FROM IFRS AND SINGLE ENTRY SYSTEM

S2 BCOM FINANCIAL ACCOUNTING – PARAGRAPH THEORY QUESTIONS

Prepared by Dr. Abbas Vattoli,

IFRS

1. Write a note of IFRS

Different accounting standards are followed worldwide to tap varied national economic and social forces.

Much of the diversity have resulted from deeply entrenched differences in legal systems, income tax systems, historical, political and economic ties

Ongoing globalization of the world economy has brought to the forefront the problems engendered by differences in these accounting reports.

Uniformity, rationalisation, comparability, transparency and adaptability in financial statements are very much required for true cross-border economic and financial integration.

The debate on international harmonization of accounting standards started in the 1960s. It formally commenced in 1973 with the establishment of the International Accounting Standards Committee (IASC)

Between 1973 and 2000, the IASC developed a comprehensive list of accounting standards and interpretations, a conceptual framework and other guidance.

In 2001, the IASC formally restructured into International Accounting Standards Board, IASB.

All 41 standards issued by the IASC were adopted and were amended and updated according to industry and accounting needs to be renamed as IFRS.

S2 BCOM/BBA FA: Notes on Issue of Debentures

This lecture notes will be useful for studying issue of debentures. it is coming in s2 bcom and s2 bba financial accounting 3rd module and 5th module respectively.

Please find attached pdf

A video on this topic is available in this link https://youtu.be/pgSQF2nBl44

S2 BCom/BBA Financial Accounting Revision note on Issue of Shares

This notes will be useful for Calicut University S2 BCom Financial Accounting Module 2 – Issue of shares, S2 BBA Financial Accounting Module 4 – Issues of shares.

Download pdf notes on issue, forfeiture and re-issue of sharesDownload

Hire purchase and Installment system: Revision notes for s2 BBA Financial Accouting

please download pdf notes here

Single Entry System: Revision Notes for S2 B Com Financial Accounting

UNIVERSITY OF CALICUT | SECOND SEM BCOM – FINANCIAL ACCOUNTING

REVISION NOTES FOR 2019 ADMISSION STUDENTS | MODULE I: SINGLE ENTRY SYSTEM / ACCOUNTING FROM INCOMPLETE RECORDS

Meaning

The term “Single Entry System” is popularly used to describe the problems of accounts from incomplete records.

Features

It is an inaccurate, unscientific and unsystematic method of recording business transactions.

There is generally no record of real and personal accounts and, in most of the cases; a record is kept for cash transactions and personal accounts.

There is no uniformity in maintaining the records and the system may differ from firm to firm depending on the requirements and convenience of each firm.

Profit under this system is only an estimate and therefore true and correct profits cannot be determined.

Ascertainment of Profit by Capital Comparison

This method is also known as Net Worth method or Statement of Affairs Method.

Closing Capital – Opening Capital = Profit

Capital is increased if there is profit, while capital is reduced if there is loss. While determining the profit by capital comparison, the following rules should be followed.

List of Indian Accounting Standards (Ind AS) with objectives |List of Ind AS 2020

All 39 Indian Accounting Standards converged with IFRS are tabulated with details such Ind AS number, name and objectives. Click on more button to see the table of list of Ind AS with objectives.

USERS OF FINANCIAL STATEMENTS

The users of financial statements include present and potential investors, employees, lenders, suppliers and other trade creditors, customers, governments and their agencies and the public.
They use financial statements in order to satisfy some of their different needs for information. The users can be described broadly in the following category:

Investors
The providers of risk capital and their advisers are concerned with the risk inherent in, and return provided by, their investments. They need information to help them determine whether they should
buy, hold or sell. Shareholders are also interested in information which enables them to assess the ability of the entity to pay dividends.

2 Employees
Employees and their representative groups are interested in information about the stability and profitability of their employers. They are also interested in information which enables them to
assess the ability of the entity to provide remuneration, retirement benefits and employment opportunities.
3 Lenders
Lenders are one of the key stakeholders which provide fuel to the business, i.e. money, which is ultimately returned back to the lenders in the nature of return, as the business generates cash
flows in future. The repayment capacity of the entity will be assessed / analyzed based on the performance of the business and accordingly restructuring, discounting in future loans, re-negotiation can be planned.
4 Supplier and Other Trade Creditors
Suppliers and other trade creditors are interested in information that enables them to determine
whether amounts owing to them will be paid when due. Trade creditors are likely to be interested
in an entity over a shorter period than lenders unless they are dependent upon the continuation
of the entity as a major customer.
5 Customers
Customers are one of the major stakeholder which eventually drives growth of any business. To
deal efficiently with them, would be a key to success of any business. If the performance of the
business is in good shape, then there are more chances to negotiate better deal in favor of
Company and vice-versa and the same can be done by analyzing financial statements of the
Company.
6 Government and Related Agencies
Governments and their agencies are interested in the allocation of resources and, therefore, the activities of entities. They also require information in order to regulate the activities of entities,
determine taxation policies and as the basis for national income and similar statistics.
7 Public
By and large, entities affect local public in variety of ways e.g. by generating employment, by
providing different kind of social events, engaging local suppliers, developing infrastructure etc.
Hence, the sufficient information in terms of trends and recent development from the financial statements would be important for them to understand future of the business.

MEASUREMENT OF THE ELEMENTS OF FINANCIAL STATEMENTS

As the name suggest, the measurement refers to the amount which needs to be
recognised. There could be several measurement methods as required by respective accounting standards. Brief descriptons of the same can be referred below:
• Historical Cost – means the transaction value that has been given or received at the time of recognising such element in the financial statements togther with all attributable costs incurred or expected to be incurred.

Current Cost – means the value of an element which has been recognised at its recent paid/ received price.

Settlement Value- means the value of an element which are required to be recognised at the value which is to be received/ paid by selling or for immediate settlement.

Present Value – Present value means present discounted value of the future net cash inflows / outflows that the item is expected to generate / settle in the normal course of business. The calculated value will represent its current value.

Fair Value – means an amount at which asset / liability could be exchanged / settled,
between knowledgeable, willing parties in an arm’s length transaction.

RECOGNITION OF THE ELEMENTS OF FINANCIAL STATEMENTS

An Item which satisfies the definition of an element should be recognised only if
• it is probable that any future economic benefit associated with the item will flow to or from the entity; and
• the item has a cost or value that can be measured with reliability.

Recognition of Assets

An item will be recognized as an asset in the Balance sheet when it is probable that the future economic benefit will flow to the entity and the asset has a cost or value that can be measured
reliably.

Recognition of Liabilities

A liability is recognised in the balance sheet when it is probable that an outflow of resources embodying economic benefits will result from the settlement of a present obligation and the amount at which the settlement will take place can be measured reliably.

Recognition of Income

Income is recognised in the statement of profit and loss when an increase in future economic benefits related to an increase in an asset or a decrease of a liability has arisen that can be measured reliably.

Recognition of Expenses

Expenses are recognized in the statement of profit and loss when a decrease in future economic benefits related to a decrease in an asset or an increase of a liability has arisen that can be measured reliably.

Link to ICAI Study Material

Elements of financial statements

Broadly, a statement of financial position or balance sheet comprises three elements viz. Asset, Liability and Equity and a statement of income comprises of two elements namely Income and Expenses.

ASSETS – “An asset is a resource controlled by the entity as a result of past events and from  which future economic benefits are expected to flow to the entity”

LIABILITY – A liability is a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits

EQUITY- Equity is the residual interest in the assets of the entity after deducting all its liabilities.

INCOME – Income is increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants.

EXPENSES – Expenses are decreases in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrences of liabilities that result in decreases in equity, other than those relating to distributions to equity participants.