Measurement Bases in Accounting
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Questions and Answers

What is the value of an asset measured at historical cost?

  • The current market price of the asset
  • The present value of the cash flows expected from the asset
  • The consideration paid to acquire or create the asset plus transaction costs (correct)
  • The cost of an equivalent asset at the measurement date

    • Which measurement basis provides monetary information about assets and liabilities using updated information at the measurement date?

  • Current value (correct)
  • Fair value
  • Historical cost
  • Current cost

    • What is the value of a liability measured at fulfillment value?

  • The present value of the cash flows expected to be derived from the liability
  • The current market price of the liability
  • The present value of the cash, or other economic resources, expected to be transferred as the liability is fulfilled (correct)
  • The cost of incurring an equivalent liability at the measurement date

    • Which of the following is NOT a type of current value measurement basis?

    <p>Historical cost</p> Signup and view all the answers

    What is the value of an asset measured at current cost?

    <p>The cost of an equivalent asset at the measurement date</p> Signup and view all the answers

    Which measurement basis is based on the price that would be received to sell an asset or paid to transfer a liability?

    <p>Fair value</p> Signup and view all the answers

    Which of the following is a characteristic of an asset?

    <p>Capable of generating future economic benefits</p> Signup and view all the answers

    What should happen if an asset loses one of its main characteristics?

    <p>It should be expensed</p> Signup and view all the answers

    What is a key element of financial statements related to the measurement of financial position?

    <p>Assets</p> Signup and view all the answers

    What is a key element of financial statements related to the measurement of performance?

    <p>Income</p> Signup and view all the answers

    What is a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity?

    <p>Asset</p> Signup and view all the answers

    How can future economic benefits embodied in an asset flow to the entity?

    <p>In a number of ways</p> Signup and view all the answers

    What are the two criteria for recognizing an item in the financial statements?

    <p>It is probable that the economic benefit will flow to the entity and the item has a cost or value that can be measured with reliability.</p> Signup and view all the answers

    What is the process of determining the monetary amounts at which the elements of the financial statements are to be recognized and carried in the balance sheet and income statement?

    <p>Measurement</p> Signup and view all the answers

    What is the consequence of an increase in an asset or a decrease of a liability that results in an increase in equity?

    <p>An increase in equity has occurred</p> Signup and view all the answers

    What is the criteria for recognising an expense?

    <p>A decrease in equity has occurred as a consequence of a decrease in an asset or an increase of a liability.</p> Signup and view all the answers

    What is the consequence of a decrease in an asset or an increase of a liability that results in a decrease in equity?

    <p>A decrease in equity has occurred</p> Signup and view all the answers

    What is the criteria for recognising a liability?

    <p>It is probable an outflow of assets to settle a present obligation.</p> Signup and view all the answers

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