Which of These Items Must Be Disclosed in General Purpose

question 6

Multiple Choice

Which of these items must be disclosed in general purpose financial reports under AASB 101?

• A)interest on borrowings
• B)different categories of receivables
• C)comparative figures
• D)all of the above

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Definitions:

Agency Costs

Expenses arising from the conflict of interest between a company's management or its shareholders and its creditors.

Financial Risk

The risk added by the use of debt financing. Debt financing increases the variability of earnings before taxes (but after interest); thus, along with business risk, it contributes to the uncertainty of net income and earnings per share. Business risk plus financial risk equals total corporate risk.

Market Risk

The possibility for an investor to experience losses due to factors that affect the overall performance of the financial markets.

Diversifiable Risk

The portion of investment risk that can be reduced or eliminated through diversification among different assets.