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Questions and Answers
Which of the following is a basis for recognising assets, liabilities, equity, income or expense in financial statements?
Which of the following is a basis for recognising assets, liabilities, equity, income or expense in financial statements?
- Current value (correct)
- Realisable value
- Nominal value
- Purchasing power value
What is the main aim of presentation and disclosure requirements in financial statements?
What is the main aim of presentation and disclosure requirements in financial statements?
- To maintain capital
- To increase profits
- To reduce expenses
- To provide a tool for effective communication (correct)
What is the difference between financial capital maintenance and physical capital maintenance?
What is the difference between financial capital maintenance and physical capital maintenance?
- Physical capital maintenance is concerned with how an entity defines the capital that it seeks to maintain while financial capital maintenance is not
- Financial capital maintenance treats the effects of increases in prices of assets and liabilities while physical capital maintenance does not
- Financial capital maintenance requires the adoption of current cost basis of measurement while physical capital maintenance does not
- Financial capital maintenance is measured in nominal monetary units while physical capital maintenance is measured in units of constant purchasing power (correct)
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