30 Questions
Which of the following is NOT one of the fundamental qualitative characteristics of useful financial information?
Comparability
What is the objective of general purpose financial reporting?
To provide financial information useful to existing and potential investors, lenders, and other creditors
What is the underlying assumption of financial reporting?
Going concern
Which of the following is NOT a characteristic of faithful representation?
Timely
What is the definition of materiality in the context of financial reporting?
The significance of financial information
Which of the following is NOT an enhancing qualitative characteristic of financial information?
Relevance
What does accrual accounting depict in financial reporting?
The effects of transactions and events on a reporting entity's economic resources and claims
According to the Conceptual Framework for Financial Reporting, what is the purpose of the framework?
To assist the Board in developing accounting standards
Which of the following is NOT a purpose of the Conceptual Framework for Financial Reporting?
To define standards for specific measurement or disclosure issues
Who does the Conceptual Framework for Financial Reporting assist in interpreting the information contained in financial statements?
Users of financial statements
What is the status of the Conceptual Framework for Financial Reporting?
It is not an IFRS
What is the role of the Conceptual Framework for Financial Reporting in the development of IFRSs?
To assist the Board in developing accounting standards
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
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
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.
Which measurement basis is most commonly used in financial statements today?
Historical cost
Which of the following is NOT a concept of capital mentioned in the text?
Monetary concept of capital
Which concept of capital is adopted by most enterprises?
Financial concept of capital
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
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
Which one of the following is NOT mentioned as a measurement basis used in financial statements?
Current cost
What does the measurement of financial statements involve?
Assigning monetary amounts to the elements of the financial statements
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.
Which assumption is mentioned in the new FRSC conceptual framework as the only underlying assumption?
Going Concern
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.
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.
What is the definition of equity according to the framework?
The residual interest in the assets of the enterprise after deducting all its liabilities.
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.
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.
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.
Test your knowledge on the importance of clear and concise information presentation, as well as the cost constraint on financial reporting. This quiz will assess your understanding of how these factors impact the usefulness and justification of reporting financial information.
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