FR Module 1 quiz

The underlying theme of the conceptual framework is

• Decision usefulness

• Understandability

• Timeliness

• Comparability

The two fundamental qualitative characteristics of useful information are

• materiality and timeliness

• understandability and verifiability

• faithful representation and comparability

• relevance and faithful representation

For information to be considered material

• it must be complete

• it must not include any bias

• its omission or misstatement could influence users' decision making

• it has a predictive or confirmatory value

Which of the following is true about historical cost account in times of rising prices

• Profits will be overstated and assets would be understated

• Asset values will be overstated

• Unrecognized gains will be recorded incorrectly

• Depreciation will be overstated

Enhancing qualities of accounting information include all of the following except:

• Comparability

• understandability

• neutrality

• timeliness

The purpose of the Conceptual Framework is

• To assist the International Accounting Standards Board to develop IFRS Standards

• To assist preparers of IFRS financial statements to develop consistent accounting policies when no IFRS Standard applies to a particular transaction or other event, or when a Standard allows a choice of accounting policy

• To assist all parties to understand and interpret IFRS Standards

• All of the above

The Conceptual Framework can override requirements in a Standard

• TRUE

• FALSE

When developing requirements for IFRS Standards, can the International Accounting Standards Board depart from the Conceptual Framework?

• No

• Yes, the Board is not required to use the Conceptual Framework when developing Standards

• Yes, but only from aspects of the Conceptual Framework and only if doing so is needed to meet the objective of financial reporting

The objective of general purpose financial reporting as described in the Conceptual Framework is to

• Provide information to regulators

• Support the entity's tax return

• Meet the information needs of an entity's stakeholders

• Provide financial information about the reporting entity that is useful to existing and potential investors, lenders and other creditors in making decisions relating to providing resources to the entity

The fundamental qualitative characteristics of financial information are

• Faithful representation and comparability

• Relevance and comparability

• Relevance and verifiability

• Relevance and faithful representation