Understanding the Impact of Clear Information Presentation and Cost Constraint o...

Which of the following is NOT one of the fundamental qualitative characteristics of useful financial information?

Faithful Representation
Comparability (correct)
Materiality
Relevance

What is the objective of general purpose financial reporting?

To provide financial information about the reporting entity
To provide financial information useful to existing and potential investors, lenders, and other creditors (correct)
To provide financial information about the economic resources and claims of the reporting entity
To provide financial information about the effects of transactions and other events on the reporting entity

What is the underlying assumption of financial reporting?

Materiality
Going concern (correct)
Accrual accounting
Timeliness

Which of the following is NOT a characteristic of faithful representation?

Timely (D) Signup and view all the answers

What is the definition of materiality in the context of financial reporting?

The significance of financial information (B) Signup and view all the answers

Which of the following is NOT an enhancing qualitative characteristic of financial information?

Relevance (A) Signup and view all the answers

What does accrual accounting depict in financial reporting?

The effects of transactions and events on a reporting entity's economic resources and claims (B) Signup and view all the answers

According to the Conceptual Framework for Financial Reporting, what is the purpose of the framework?

To assist the Board in developing accounting standards (A) Signup and view all the answers

Which of the following is NOT a purpose of the Conceptual Framework for Financial Reporting?

To define standards for specific measurement or disclosure issues (B) Signup and view all the answers

Who does the Conceptual Framework for Financial Reporting assist in interpreting the information contained in financial statements?

Users of financial statements (A) Signup and view all the answers

What is the status of the Conceptual Framework for Financial Reporting?

It is not an IFRS (B) Signup and view all the answers

What is the role of the Conceptual Framework for Financial Reporting in the development of IFRSs?

To assist the Board in developing accounting standards (B) Signup and view all the answers

What is the purpose of the Conceptual Framework for Financial Reporting as it relates to national standard-setting bodies?

To assist national standard-setting bodies in developing national standards (D) Signup and view all the answers

Who does the Conceptual Framework for Financial Reporting provide information about the IASB's approach to the formulation of IFRSs?

Those interested in the work of the IASB (C) Signup and view all the answers

Which one of the following is true regarding the recognition of income and expenses in financial statements?

Income and expenses are recognized simultaneously with the recognition of increases in assets or decreases in liabilities. (A) Signup and view all the answers

Which measurement basis is most commonly used in financial statements today?

Historical cost (C) Signup and view all the answers

Which of the following is NOT a concept of capital mentioned in the text?

Monetary concept of capital (A) Signup and view all the answers

Which concept of capital is adopted by most enterprises?

Financial concept of capital (C) Signup and view all the answers

Which concept of capital maintenance considers a profit to be earned only if the physical productive capacity of the enterprise at the end of the period exceeds the physical productive capacity at the beginning of the period?

Physical capital maintenance (D) Signup and view all the answers

Which concept of capital maintenance considers a profit to be earned only if the financial amount of the net assets at the end of the period exceeds the financial amount of the net assets at the beginning of the period?

Financial capital maintenance (B) Signup and view all the answers

Which one of the following is NOT mentioned as a measurement basis used in financial statements?

Current cost (B) Signup and view all the answers

What does the measurement of financial statements involve?

Assigning monetary amounts to the elements of the financial statements (D) Signup and view all the answers

Does the Framework provide concepts or principles for selecting measurement bases for financial statements?

No, it does not provide concepts or principles for selecting measurement bases. (D) Signup and view all the answers

Which assumption is mentioned in the new FRSC conceptual framework as the only underlying assumption?

Going Concern (C) Signup and view all the answers

What is the definition of an asset according to the framework?

A resource controlled by the enterprise as a result of past events and from which future economic benefits are expected to flow to the enterprise. (D) Signup and view all the answers

What is the definition of a liability according to the framework?

A present obligation of the enterprise arising from past events, the settlement of which is expected to result in an outflow from the enterprise of resources embodying economic benefits. (B) Signup and view all the answers

What is the definition of equity according to the framework?

The residual interest in the assets of the enterprise after deducting all its liabilities. (A) Signup and view all the answers

What is the definition of income according to the framework?

Increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants. (A) Signup and view all the answers

What is the definition of expense according to the framework?

Decreases in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrence of liabilities that result in decreases in equity, other than those relating to distributions to equity participants. (C) Signup and view all the answers

When is an asset recognized in the statement of financial position according to the general criteria for recognition?

When it is probable that any future economic benefit associated with the item will flow to or from the enterprise; and The item's cost or value can be measured with reliability. (B) Signup and view all the answers