International Accounting Standards and IFRSs

What do accounting principles determine?

For financial accounting, what does the term 'business entity' refer to?

How are the accounts of a sole trader or partnership prepared for accounting purposes?

What is the liability of a sole trader for the debts of the business?

How is a limited company regarded for accounting purposes?

What is the primary focus of financial accounting information?

What are International Accounting Standards (IASs) and International Financial Reporting Standards (IFRSs)?

Which of the following entities do not normally have to comply with accounting standards?

What does IAS 1 state about the preparation of financial statements?

In accordance with IAS 1, what is the importance of fair presentation in financial statements?

What are accounting policies according to the text?

When should financial statements be prepared on the accruals basis according to IAS 1?

What are accounting estimates according to the text?

What should management consider when selecting accounting policies?

"Relevance" and "Reliability" are identified as which type of characteristics in the Conceptual Framework for Financial Reporting?

"Comparability" and "Understandability" are identified as which type of characteristics in the Conceptual Framework for Financial Reporting?

"Fairly presented" financial statements are required by law in some countries for which type of entities?

Which of the following is a characteristic of faithful representation of financial information?

What does verifiability provide assurance to users regarding?

Which characteristic of information ensures that users are able to appreciate its significance?

What is the trade-off between relevance and reliability when there is a conflict between the two?

Which characteristic ensures that financial information is free from bias or manipulation?

What does timeliness of financial information refer to?

Which characteristic ensures that users can compare the financial statements of an entity over time and with those of other entities?

What should preparers of accounts observe to enhance comparability over time?

What characteristic seeks to ensure that where there is uncertainty, profits and assets are not overstated while losses and liabilities are not understated?

What should be provided to users when financial information is not capable of being verified?

What may be acceptable if the information is to substantially retain the fundamental characteristics of relevance and faithful representation?

What is assumed about users' knowledge for ensuring understandability of financial information?

What is the main purpose of historical cost accounting system?

Under what basis are financial statements usually prepared?

When is income recognized in the financial accounts according to the accruals concept?

What does consistency in accounting treatment aim to prevent?

What is the main purpose of prudence in the preparation of financial statements?

What would be the consequence if financial statements were prepared without accounting regulation?

'Materiality' is a threshold quality demanded of all information in financial statements. What happens if an item is deemed immaterial?

'Going concern' assumption means that financial statements are prepared on the assumption that:

What is meant by 'duality' in accounting?

What does 'accruals' concept dictate about recognizing income and expenditure?

How does 'prudence' influence recognizing sales and profit in financial statements?

What is meant by 'consistency' in accounting?

The business entity principle in accounting applies to all types of businesses, including sole traders and partnerships.

A limited company is not regarded as a separate legal entity distinct from its owners, for accounting purposes.

Accounting principles dictate how income and expenditure are recorded in the statement of financial position.

The going concern assumption means that financial statements are prepared assuming that the business will cease operations in the near future.

Prudence in the preparation of financial statements dictates that profits should be overstated and losses understated.

The basic principles of accounting have been developed by economists over time.

Information is relevant if it can be used to predict future financial position and performance.

Faithful representation of information requires it to be complete, neutral, and free from error.

Comparability allows users to compare the financial statements of different entities to evaluate their relative financial performance and financial position.

Verifiability provides assurance to users regarding the credibility and reliability of financial information.

Timeliness of financial information refers to whether it is likely to influence users' decisions.

Understandability of information depends on the capabilities of users and their willingness to study the information provided with reasonable diligence.

Information that is relevant may not be reliable and vice versa.

Neutrality means freedom from bias, but prudence may result in bias.

Where there is a conflict between relevance and reliability, it is usually appropriate to prioritize the most relevant information.

'Comparability' and 'Understandability' are identified as enhancing qualitative characteristics in the Conceptual Framework for Financial Reporting.

'Relevance' and 'Reliability' are identified as enhancing qualitative characteristics in the Conceptual Framework for Financial Reporting.

A sole trader is liable for the debts of the business without limitation.

Sole traders and partnerships are not required to comply with accounting standards.

It is extremely common for companies to depart from the requirements of an accounting standard in order to achieve a fair presentation.

IAS 1 identifies two accounting concepts as particularly important in preparing financial statements: the going concern concept and the accruals concept.

Accounting estimates are not considered reliable because they cannot be measured precisely.

All the elements of financial statements, including assets, liabilities, revenues, expenses, and changes in ownership interest, have to be measured using a single measurement basis as part of accounting policies.

Management should use its judgment in developing an accounting policy that provides the most useful information to users of the financial statements, where accounting standards do not provide specific guidance.

An entity should always select the accounting policy that results in information that is most useful to users, regardless of its appropriateness to its particular circumstances.

According to the Conceptual Framework for Financial Reporting (the Framework), the two fundamental qualitative characteristics of useful financial information are relevance and reliability.

Sole traders and partnerships are legally required to have their final accounts fairly presented.

It is acceptable to depart from the requirements of an accounting standard to achieve a fair presentation if it substantially retains the fundamental characteristics of relevance and faithful representation.

Financial statements should not always be prepared on a going concern basis, according to IAS 1.

An enterprise should prepare its financial statements, except for cash flow information, on the historical cost basis of accounting.

If a business becomes insolvent, the owners are only liable for the sum they have invested. (True/False)

Under historical cost accounting, the figure shown in the financial accounts for an item is based on its current market value. (True/False)

Materiality in financial statements means that all information, regardless of significance, should be included. (True/False)

Financial statements are usually prepared on the assumption that the business will not continue in operational existence for the foreseeable future. (True/False)

Under the accruals concept, income is recognized in the financial accounts when the cash is received. (True/False)

Prudence in the preparation of financial statements supports the presentation of financial information in a biased manner. (True/False)

Accounting standards are a set of rules and guidelines governing the preparation and presentation of all financial statements that purport to show a 'true and fair view'. (True/False)

Without accounting regulation, preparers of financial statements could adopt any accounting treatments they choose. (True/False)

Sales and profit should be included in the statement of profit or loss before the cash has been received according to the principle of prudence. (True/False)

The going concern concept justifies a range of practices such as valuing assets at their current market value. (True/False)

Financial statements must be prepared on a going concern basis unless there is an intention or necessity to close down the business. (True/False)

Accounting standards ensure that users can assess the performance of an entity in a meaningful way and compare financial statements of different entities. (True/False)

Match the accounting concept with its description:

Match the accounting principle with its focus:

Match the accounting standard concept with its purpose:

Match the accounting standard concept with its characteristic:

Match the following with their definitions:

Match the following concepts with their descriptions:

Match the following with their roles in financial statement preparation:

Match the following statements with their correct characteristics of financial information:

Match the following accounting principles with their descriptions:

Match the following entities with their treatment in accounting standards:

Match the following qualitative characteristics with their descriptions according to the Conceptual Framework for Financial Reporting:

Match the following financial statement elements with their measurement basis according to accounting policies:

Match the following terms related to the going concern concept with their descriptions:

Match the following terms related to accounting standards with their descriptions:

Match the enhancing qualitative characteristic with its description:

Match the characteristic of information with its impact on decision-making:

Match the potential conflict in accounting with its resolution principle:

Match the accounting concept with its explanation: