Question

According to IAS 1, Presentation of Financial Statements, compliance with IFRS Standards will normally ensure that:

A the entity's inventory is valued at net realisable value
B the entity's assets are valued at their break-up value
C the entity's financial statements are prepared on the assumption that it is a going concern
D the entity's financial position, financial performance and cash flows are presented fairly

Answer 1

Under IAS 1, compliance with IFRS ensures that financial statements present the financial position, performance, and cash flows of an entity fairly, with the assumption of ongoing operation as a going concern.

Step-by-step explanation:

According to IAS 1, Presentation of Financial Statements, compliance with IFRS Standards will normally ensure that the entity's financial position, financial performance, and cash flows are presented fairly.

This means when an entity follows the International Financial Reporting Standards (IFRS), it is expected that the financial statements provide a true and fair view of the company's financial performance.

IAS 1 requires entities to prepare their financial statements under the going concern assumption, meaning that the entity will continue its operations in the foreseeable future and does not intend to liquidate its assets or cease trading.

Assets on a balance sheet—such as bank reserves, loans made, and U.S. Government Securities—should be assessed based on their realizable value, and liabilities, like deposits made in the bank, should accurately reflect the obligations of the entity.