CFAS_Quiz 2

Statement 1: The Conceptual Framework's purpose is to serve as a guide in developing, understanding, and interpreting the Standards.

Statement 2: The Conceptual Framework is a Standard.

• Both statements are true.

• Both statements are false.

• Only first statement is true.

• Only second statement is true.

Statement 1: Relevance is an example of enhancing qualitative characteristics.

Statement 2: Understandability is an example of fundamental qualitative characteristics.

• Both statements are true.

• Both statements are false.

• Only first statement is true.

• Only second statement is true.

Statement 1: Relevant information has predictive value but no feedback value.

Statement 2: Verifiability is an element of faithful representation.

• Both statements are true.

• Both statements are false.

• Only first statement is true.

• Only second statement is true.

Statement 1: The elements directly related to the measurement of financial position are income and expenses.

Statement 2: The elements directly related to the measurement of financial performance are assets, liabilities and equity.

• Both statements are true.

• Both statements are false.

• Only first statement is true.

• Only second statement is true.

Statement 1: The two concepts of capital are tangible and intangible.

Statement 2: A reporting entity is one that is required, or chooses, to prepare the financial statements.

• Both statements are true.

• Both statements are false.

• Only first statement is true.

• Only second statement is true.

Statement 1: Cost is a pervasive constraint - it affects virtually all aspects of financial reporting.

Statement 2: Organize is the first step in materiality process.

• Both statements are true.

• Both statements are false.

• Only first statement is true.

• Only second statement is true.

Statement 1: Total equity is measured directly.

Statement 2: Equity is generally positive although some of its components may be negative.

• Both statements are true.

• Both statements are false.

• Only first statement is true.

• Only second statement is true.

Statement 1: The historical cost of an asset is the consideration paid to acquire the asset minus transaction costs.

Statement 2: The historical cost of a liability is the consideration received to incur the liability plus transaction costs.

• Both statements are true.

• Both statements are false.

• Only first statement is true.

• Only second statement is true.

Statement 1: Value in use is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.

Statement 2: Fair value is the present value of the cash flows, or other economic benefits, that an entity expects to derive from the use of an asset and from its ultimate disposal.

• Both statements are true.

• Both statements are false.

• Only first statement is true.

• Only second statement is true.

Statement 1: The relevance of information is not affected by how that asset or liability contributes to future cash flows.

Statement 2: A high level of measurement uncertainty does necessarily prevent the use of a measurement basis that provides relevant information.

• Both statements are true.

• Both statements are false.

• Only first statement is true.

• Only second statement is true.