STUDENT NAME: NCUBE VERON

STUDENT NUMBER: N02215777F

MODULE NAME: FINANCIAL ACCOUNTING(CAC1101)

LECTURER NAME: MRS SHUMBA

SUBMISSION DATE: 15 SEPTEMBER 2022

QN: The characteristics of each IAS1 and supporting journal entries that connect the standard to
respective accounts and financial statements.

International Accounting Standard 1 explains the general features of financial statements such as fair
presentation and compliance with IFRS, going concern, accrual basis of accounting, materiality and
aggregation ,offsetting, frequency of reporting, comparative information and consistency of
presentation. The journal entries that are usually found on the statement of comprehensive income
are as follows: 1. sale of goods on credit and the journal entry is, DR bank XX , CR sales XX
(being a total of sales).2.Purchases of goods on credit , the journal entry is DR purchases XX, CR total
accounts payable XX and the narration would be being total purchases during the period recorded.
Journal entries that are found on financial statements are as follows; Credit sales of goods is passed
by debiting the accounts receivable with the corresponding credit to the sales account( DR Accounts
receivable XX and CR Sales account XX) Being accounts receivable. 2, purchase of inventory on credit.
Debit the inventory account and credit the accounts payable account. Being a purchase of inventory.

International Accounting Standard 2 provides guidance for determining the cost of inventories and the
subsequent recognition of the cost as an expense, including any write down to net realizable value. It
also states that stock should be valued at a lower of cost and net realizable value and common
classifications of inventories are merchandise, production supplies, materials, work in progress and
finished goods. The journal entries that explains the IAS2 as follows : purchase of inventory on credit ,
we debit the inventory account and credit the accounts payable account , being a purchase of
inventory. The transaction above can be used on the income statement as opening stock and closing
stock for the trading period on the other hand, inventory can be used on the statement of financial
position as a current asset.

International Accounting Standard 7(IAS7) The statement of cashflows requires an entity to present a
statement of cashflows as an intergral part of its primary financial statements. IT also seeks to require
the presentation of financial information about the historical changes in cash and cash equivalents of
an entity by means of statement of cashflows , which classifies the cashflows during the period
according to operating , investing, and financing activities. The following transactions occur under the
statement of cashflows; purchase of a fixed asset and the journal entry is debit the asset account and
credit cash or bank with the same amount. Being a purchase of a fixed asset. secondly, payment of tax
and the journal entry would be as follows; debit :tax liability carried forward(per later balance sheet)
and tax payment during the year(bank or cash) AND credit tax liability brought forward(per earlier
balance sheet) tax debited in the statement of comprehensive income.

International Accounting Standard8 (Accounting policies, changes in accounting, estimates and

errors.) It prescribes the criteria for selecting and changing policies, together with the accounting
treatment and disclosure of changes in accounting ,changes in estimates and corrections of errors
.Examples of changes in accounting policies are valuation of inventory, valuation of fixed assets, and
treatment of goodwill. The journal entry for valuation of inventory is as follows; DR raw material and
merchandise inventory XX and CR Accounts payable XX. Being a valuation of inventory.

IAS 10 events after the reporting period , it prescribes that when an entity should adjust its financial
statements for events after the period and the disclosures that an entity should give about the date
when the financial statements were authorized and about events after the reporting period. Adjusting
events are those providing evidence of conditions existing after at the end of the reporting period ,
where as non adjusting events are indicative of conditions arising after the reporting period. The
journal entries supporting IAS10 are loss of trade receivables account (DR Bad debt XX and credit the
accounts receivables XX. Inventory damaged by fire we DR Loss by fire account XX and credit
purchases account.

Construction contracts IAS11 it prescribes the criteria for selecting and changing accounting policies
together with the accounting treatment and disclosure of changes in accounting estimates and
contractors who undertake such projects on behalf of its clients. Transactions are revenue recognition
and expenses recognition. The journal entries are as follows; DR expenses XX and CR Cash XX ,
Being an expense recognition.

Income tax (IAS12) it describes the accounting treatment for income tax . Income tax include all
domestic and foreign taxes that are based on taxable profits , current tax for current and prior period
is , to the extent that it is unpaid , recognized as a liability . overpayment of a current tax is
recognized as an asset. The journal entry for income tax is recorded as follows; DR Income tax as an
expense XX and CR Income tax payable XX.

Information reflecting the effects of prices (IAS15) the objective is to specify disclosures reflecting the
effects of changes in prices on the measurement used it the determination of an enterprise results of
operations and its financial position.

Property ,plant and equipment (IAS16) It establishes the principles for recognizing property ,plant and
equipment as assets measuring their carrying amounts and measuring the depreciation changes and
impairment losses to be recognize in relation to them. The supporting journal entries are as follows;
purchase of a fixed asset is recorded by Dr asset account XXX and CR Cash or bank XXX. Secondly,
loss on sale of fixed assets , we DR cash for the amount received , debit accumulated depreciation,
debit the loss on sale of asset account and CR The fixed asset. Being a loss on disposal of a asset.

Revenue IAS 17 the standard applies to accounting for revenue arising from the following transactions
and events ;the sale of goods ,rendering of services and by others of entity assets yielding interest ,
royalities and dividents. The journal entry for recording the sale of goods on credit , we debit the
debtors account and credit sales account .being a sale of goods.

Employee benefits(IAS19) It requires an entity to recognize a liability when an employee has provided
service in exchange for employee benefits to be paid in the future and an expense when the entity
consumes the economic benefit arising from the service provided by an enterprise in exchange for
employee benefits. The transaction would be a payment of wages and salaries and the journal entry
would be DR wages and salaries XX and CR cash or bank XX. Being a payment for an expense.

IAS20 Prescribes the accounting for, and disclosure of government grants and other forms of
government assistance. The transaction would be ; purchase of machinery by the government to the
business so as to increase productivity of essential goods such as basic goods that are highly needed
by the society or economy. The journal entry would be a debit of machinery XX and credit bank XX.
Being a purchase of an asset.

IAS21, the main objective is to prescribe how to include foreign currency transactions and foreign
operation in the financial statements of an entity and how to translate financial statements into a
presentation currency. The transaction is a purchase of a new fixed asset using foreign currency an the
journal will be, DR asset XX and credit BANK XX( being a purchase of an asset). Secondly, sale of
goods on credit using foreign currency. We debit debtors account XX and credit sales account XX
(being total sales recorded).

The objective of IAS22 is to reveal the accounting treatment for business combinations. The standard
covers both acquisition of one enterprise by another and also the rare situation where an acquirer
cannot be identified (a uniting interest). The transaction supporting a purchase of an enterprise and
the journal would be a DR assets(all assets of the acquired enterprise) and CR its all liability , being a
purchase of an enterprise.

IAS 23 borrowing costs the objective is to explain the accounting treatment for borrowing costs.
Borrowing costs include interest on bank overdraft on bank overdraft and borrowing , finance charges
on finance leases and exchange differences on foreign currency borrowing where there are regarded
as an adjustment to interest costs .the supporting transaction would be DR interest charges expense
XX and CR Bank XX (Being a payment of interest charge.

IAS24 the accounting standard ensures that financial statements cointan the necessary disclosures to
draw attention to the possibility that a reporting entity financial position and Profit or loss may have
been affected by the existence of related and by transaction and outstanding balances with such
parties .The transaction is as follows ;the loan interest paid and the journal entry would be a DR
interest expense , DR loan payable and CR CASH. Being a payment of a loan interest.

IAS25 this standard deals with accounting for investments in the financial statements of enterprises
and with the related disclosure requirements.

IAS26 benefit plan- it prescribes the minimum content of the financial statements of retirement
benefits plan.

IAS27 It prescribes the accounting disclosure requirements for investment in subsidiaries, joint
ventures and associates when an entity elects or is required by the local regulation to present
separate financial statements.

IAS28 Investments in associates and joint ventures , it prescribes how to apply the equity method
when accounting for investments in associates and joint ventures . An associate is an entity over
which the investor has significant influence.

IAS29 Financial reporting hyperinflationary economies- it applies to any entity whose functional
currency is the currency of a hyperinflationary economy . hyperinflationary is indicated by factors
such as prices , interest and wages linked to a price index and cumulative inflation over 3 years of
around 100% or more.

IAS33 it deals with the calculations and presentations of earnings per share (EPS). It applies to entities
whose ordinary shares or potential ordinary shares (for example convertible options and warrants)
publicly traded .Non public entities electing to present EPS must also follow the standard .

IAS36 the impairment of assets , the standard seeks to ensure that an entities assets are not carried at
more than their recoverable amount , that is the higher of fair value less cost of disposal and value in
use
IAS37 provisions contigent ,assets and liabilities , it ensures that appropriate recognition criteria and
measurements basis are applied to premises, contigent liabilities and contigent assets. We record a
liability if the loss is probable and the amount is at least reasonable estimable (Debit to a
loss\expense account and credit to a liability. Contigent assets are disclosed when an inflow of
economic benefits is considered more likely than not to occur ( greater tan 50%).