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Chapter 3: Q2ISTQ (page 150)

Information in a company鈥檚 first IFRS statements must:

(a) have a cost that does not exceed the benefits.

(b) be transparent.

(c) provide a suitable starting point.

(d) All the above.

Short Answer

Expert verified

The correct option is 鈥渄鈥�.

Step by step solution

01

Explanation to correct option

As per the IFRS 1, First IFRS statements of company must include the expenses that are not greater by its benefits, must provide the starting point which is suitable, and also the information should be transparent, hence all of the above is correct option.

02

Explanation to incorrect options

Option a) Information provided in First IFRS statement should be transparent and should provide suitable starting point also.

Option b) As per the First IFRS statement, expenses should not be greater than by its benefits, and also it should indicate suitable beginning point

Option c) As per the First IFRS statement, expenses should not be greater than by its benefits, and also the information furnished should be transparent.

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Most popular questions from this chapter

(L09) (Worksheet) Presented below are the selected accounts for Alvarez Company as reported in the worksheet at the end of May 2017.

ALVAREZ CO.

Worksheet

For The Month Ended May 31, 2017

Adjusted

Trial Balance

Income

Statement

Balance

Sheet

Accounts Titles

Dr.

Cr.

Dr.

Cr.

Dr.

Cr.

Cash

9,000

Inventory

80,000

Sales Revenue

450,000

Sales returns and allowances

10,000

Sales Discounts

5,000

Cost of Goods Sold

250,000

Instructions:

Complete the worksheet by extending the amounts reported in the adjusted trial balance to the appropriate columns in the worksheet. Do not total individual columns.

When the accounts of Daniel Barenboim Inc. are examined, the adjusting data listed below are uncovered on December 31, the end of an annual fiscal period.

  1. The prepaid insurance account shows a debit of \(5,280, representing the cost of a 2-year fire insurance policy dated August 1 of the current year.
  2. On November 1, Rent Revenue was credited for \)1,800, representing revenue from a subrental for a 3-month period beginning on that date.
  3. Purchase of advertising materials for \(800 during the year was recorded in the Advertising Expense account. On December 31, advertising materials of \)290 are on hand.
  4. Interest of $770 has accrued on notes payable.

Instructions

Prepare the following in general journal form.

  1. The adjusting entry for each item.
  2. The reversing entry for each item where appropriate.

BE3-13 (L08) Assume that Best Buy made a December 31 adjusting entry to debit Salaries and Wages Expense and credit Salaries and Wages Payable for \(4,200 for one of its departments. On January 2, Best Buy paid the weekly payroll of \)7,000. Prepare Best Buy鈥檚 (a) January 1 reversing entry; (b) January 2 entry (assuming the reversing entry was prepared); and (c) January 2 entry (assuming the reversing entry was not prepared).

E3-8 (L03) EXCEL (Adjusting Entries) Andy Roddick is the new owner of Ace Computer Services. At the end of August2017, his first month of ownership, Roddick is trying to prepare monthly financial statements. Below is some information relatedto unrecorded expenses that the business incurred during August.1. At August 31, Roddick owed his employees \(1,900 in wages that will be paid on September 1.2. At the end of the month, he had not yet received the month鈥檚 utility bill. Based on past experience, he estimated the billwould be approximately \)600.3. On August 1, Roddick borrowed \(30,000 from a local bank on a 15-year mortgage. The annual interest rate is 8%.4. A telephone bill in the amount of \)117 covering August charges is unpaid at August 31.InstructionsPrepare the adjusting journal entries as of August 31, 2017, suggested by the information above.

What are adjusting entries and why are they necessary?
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