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You are a Financial Controller at BCD and are in the process of preparing the year-end financial statements. A member of your finance team has come to see you about her provisions balance at year-end.

She says that the Managing Director has asked her to increase the provisions balance by $1 million overall. She thinks this is because BCD has had a very good year in terms of profit, and the Managing Director wants to put some profit aside to protect against any future reductions in profit. $1 million is material to BCD.

You believe that the provisions balance was fairly stated without the additional $1 million.

Which TWO of the following would be appropriate actions in this scenario?

Options:

Discuss the matter with the Finance Director as he is your immediate line manager.

Speak to the Managing Director to explain that the level of provisions is governed by financial reporting standards.

Tell the member of your finance team to ignore the Managing Director and to leave the provisions balance as it was.

Contact the external auditors of BCD and tell them that the Managing Director wants to change the provisions balance.

Speak to the shareholders at the upcoming annual general meeting about this issue.

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Question 2

Which of the following are limitations of financial statement figures for ratio analysis? Select the ALL that apply.

Options:

Only provides historic data

Only provides financial information

Limited information to identify trends over time

Provide only summarised information

Contains complicated information that needs to be summarised

Only provides forecast data

Question 3

When accounting for a finance lease under IAS 17 Leases, which TWO of the following are recognised in the statement of profit or loss?

Options:

Finance cost element of the lease payments

Depreciation of the leased asset

Lease payments paid

Lease payments payable

Capital repayment element of the lease payments

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F2 Exam Dumps : F2 Advanced Financial Reporting

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