Accounting and Financial Reporting
Financial reporting
This domain tests IFRS-based reading of financial statements: balance sheet, income statement, cash-flow statement and notes. Candidates should adjust reported figures for comparability and detect accounting signals.
Core standards
- IFRS 15 recognizes revenue when control transfers, over time or at a point in time.
- IFRS 9 governs classification and impairment of financial assets, using expected credit losses.
- IFRS 16 brings most leases onto the balance sheet as right-of-use assets and lease liabilities.
- Consolidation requires control; related-party and segment disclosures matter for governance and analysis.
Worked example
A contractor has a MNT 120 million contract, expected costs MNT 80 million, and is 30% complete in year 1 under an over-time measure. Revenue is 30% × 120 = MNT 36 million; cost is 30% × 80 = MNT 24 million; profit is MNT 12 million. The reasoning follows percentage-of-completion, not cash received; billing and cash collection are separate.
Traps
- Treating EBITDA as operating cash flow.
- Ignoring lease liabilities after IFRS 16.
- Missing impairment reversals or expected credit losses.
- Comparing companies without adjusting accounting policies.
- Overlooking related-party transactions and off-balance-sheet obligations.