International Financial Reporting Standards Very Short Answer Type Questions

Question 1.
What are Accounting Standards?
Answer:
Accounting standards are the guidelines laid down by an apex expert accounting body as to how business transactions or events are to be recorded in the books of accounts, and the manner in which the business transactions are to be exhibited in the financial statements.

Question 2.
Give importance of Accounting standards.
Answer:
They laydown the accounting principles to be followed by all in the preparation and presentation of financial statement. So they ensure uniformity in Accounting records of all and they are comparable for any purpose.

Question 3.
State the nature of accounting standards.
Answer:
The accounting standards may be recommendatory or mandatory in nature. Generally, the accounting standards are recommendatory in the initial issue of their issue i.e., after they had created requisite awareness amongst the business houses.

Question 4.
Write a note on extra ordinary items to be disclosed as per AS-5.
Answer:
Extraordinary items are unusual items distinct from the day-to-day operations of the enterprise. AS-5 lays down that, if extraordinary items are included in the income statement of an accounting period, those items should be separately disclosed in the statement of profit or loss of the current period, stating their nature and amount.

Question 5.
Which is the Authority which issues Accounting Standards?
Answer:
Accounting standards are issued by central government and recommended by Institute of Chartered Accountants of India.

Question 6.
Give the meaning of IFRS.
Answer:
International Financial Reporting Standards (IFRS) are a set of international accounting standards stating how particular types of transactions and other events should be reported in financial statements.

Question 7.
State any four IFRS.
Answer:

  • IFRS 2 Share-based Payment
  • IFRS 3 Business Combination’s
  • FRS 4 Insurance Contracts
  • IFRS 9 Financial Instruments

Question 8.
State any four assumptions in IFRS.
Answer:
Four assumptions of IFRS are:

  • Economic Entity
  • Going Concern
  • Monetary Unit Assumption
  • Accrual Basis

Question 9.
Mention two objectives of IFRS.
Answer:
The objectives of IFRS are:

  • To create comparable, reliable and transparent financial statement
  • To make a common platform for better understanding of accountin internationally
  • To faciliate greater cross border capital raising and trade.

Question 10.
Write any two demerits of IFRS.
Answer:
The two demerits of IFRS are:

  • Additional disclosures are longer and stricter and as such will require more work and will therefore cost more to produce and audit.
  • It requires high costs.

Question 11.
What are consolidated financial statements?
Answer:
Financial statements prepared by a Holding company by combining the financial statements of its subsidiary company as per AS-21 are called consolidated financial statements.

Question 12.
What is an Intangible asset as per AS-27?
Answer:
The AS-27 defines an intangible asset as “an identifiable non-monetary asset without physical substance, held for use in production and supply of goods and services, for rental to others, or for an administrative purposes.”

Question 13.
State the objectives of IFRS-1.
Answer:
To prescribe the procedures when an entity adopts IFRSs for the first time as the basis for preparing its general purpose financial statements.

Question 14.
State the objectives of IFRS 2 Share-based Payment.
Answer:
To prescribe the accounting for transactions in which an entity receives or acquires goods or services either as consideration for its equity instruments or by incurring liabilities for amounts based on the price of the entity’s shares or other equity instruments of the entity.

Question 15.
State the objectives of IFRS 3 Business Combinations.
Answer:
An acquirer of a business recognizes the assets acquired and liabilities assumed at their acquisition-date fair values and discloses information that enables users to evaluate the nature and financial effects of the acquisition.

Question 16.
State the objectives of IFRS 4 Insurance Contracts.
Answer:
To prescribe the financial reporting for insurance contracts until the IASB completes the second phase of its project on insurance contracts. This standard applies to insurance contracts that an entity issues.

Question 17.
State the objectives of IFRS 5 Non-current Assets held for Sale and Discontinued.
Answer:
To prescribe the accounting for non-current assets held for sale and the presentation and disclosure of discontinued operations.

Question 18.
What is investment property as per Ind AS-40?
Answer:
It is the property held by the owner to earn rentals or for capital appreciation or both, rather use in the production or supply of goods or services or far administrative purposes or sale in the ordinary course of business.

Question 19.
State the objectives of IFRS 6 Exploration for and Evaluation of Mineral Resources.
Answer:
To prescribe the financial reporting for the exploration for and evaluation of mineral resources until the IASB completes a comprehensive project in this area.

Question 20.
State the objectives of IFRS 8 Operating Segments.
Answer:
An entity shall disclose information to enable users of its financial statements to evaluate the nature and financial effects of the business activities in which it engages and the economic environments in which it operates.

Question 21.
State the objectives of IFRS 9 Financial Instruments.
Answer:
IFRS 9 sets out requirements for recognition and measurement, impairment, derecognition and general hedge accounting.

Question 22.
State the objectives of IFRS 10 Consolidated Financial Statements.
Answer:
To prescribe a single consolidation model for all entities based on control, irrespective of the nature of the investee i.e. whether an entity is controlled through voting rights of investors or through other contractual arrangements as is common in special purpose entities.

Question 23.
State the objectives of IFRS 11 Joint Arrangements.
Answer:
To establish principles for financial reporting by entities that have an interests in joint arrangements.

Question 24.
What is EPS?
Answer:
EPS. Represents earnings per share and EPS = Amount for equity dividends measures the return per share. No. of equity shares.

Question 25.
State the objectives of IFRS13 Fair Value Measurement.
Answer:
To establish a definition of fair value, provide guidance on how to determine fair value and prescribe the required disclosures about fair value measurements. However, IFRS 13 does not stipulate which items should be measured or disclosed at fair value.

Question 26.
Expand I.A.S.Band G.A.A.P.
Answer:

  • IASB – International Accounting Standard Board
  • GAAP – Generally Accepted Accounting Principles.