PAS 1 Presentation of Financial Statements

True or False

1. Entities are required to prepare their financial statements based on the going concern
assumption, assuming that the entity will continue its operations in the foreseeable future.
True

2. Under PAS 1, an entity is allowed to change its accounting policies without any specific
justification.
False

3. The statement of comprehensive income includes all items of income and expenses
recognized in the income statement and other comprehensive income.
True

4. If an entity changes its accounting policies, PAS 1 requires retrospective application,

meaning restating prior period financial statements unless it is impracticable to do so.
True

5. The order of liquidity for assets in the statement of financial position is determined based
on the ease of converting the asset into cash.
True

6. PAS 1 requires entities to disclose the fair value of financial instruments in the notes to
the financial statements.
True

7. Extraordinary items, such as gains or losses from the sale of a significant portion of the
business, should be included in the income statement according to PAS 1.
False

8. When an entity changes its classification of assets and liabilities between current and
non-current, it is not required to disclose the reclassified amounts.
False

9. PAS 1 allows entities to present an additional statement of financial position at the

beginning of the earliest comparative period when there is a retrospective restatement.
True
 10. The objective of financial statements, as per PAS 1, is to provide information about an
entity's financial position, performance, and changes in financial position that is useful to
a wide range of users in making economic decisions.
True