Question 1

What is NCEA AS 91406 about?

Accepted Answer

This standard asks you to prepare and explain company financial statements—like the income statement, balance sheet, and cash flow statement—from raw accounting data and adjustments. You'll need to make journal entries, complete these financial statements correctly, and explain why certain items are treated the way they are.

Question 2

What do students need to do for AS 91406?

Accepted Answer

1. Complete general journal and general ledger entries using correct account names and figures 2. Prepare accurate extracts from the statement of comprehensive income (profit and loss) and statement of financial position (balance sheet) 3. Complete cash flow statement extracts and distinguish between different types of transactions (like buying shares versus selling shares) 4. Explain the treatment of specific items in financial statements—for example, why tax payable is less than tax expense when tax has been pre-paid 5. Integrate relevant figures into your explanations to show how amounts link together across the financial statements

Question 3

What's the difference between Achieved, Merit, and Excellence for AS 91406?

Accepted Answer

Achieved: You complete most of the journal entries and financial statement sections with some accuracy, and attempt to explain one or two treatments of items. Merit: You complete accounting entries using mostly correct account names and figures, understand the difference between journal and ledger entries, complete financial statement extracts with mostly accurate figures, and explain treatments like why provisional tax paid reduces the tax liability. Excellence: You complete all entries and extracts with accurate figures, clearly distinguish between different types of transactions (like share buybacks versus share sales), and integrate specific dollar amounts into paragraph explanations that show how amounts flow through the financial statements and affect different sections.

Question 4

What mistakes do students typically make in AS 91406?

Accepted Answer

1. Including items that don't belong in the cash flow statement (called 'foreign items')—only actual cash movements go in the cash flow statement, not accruals or non-cash items 2. Using incorrect or vague account names in journal entries instead of the actual account names from the trial balance, or not understanding the difference between a general journal entry and how it appears in the general ledger 3. Not reading all the additional information carefully before making adjustments—for example, missing details about what the numbers actually mean or using the wrong number of transactions

Company financial statements

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