ACC 101_First Quiz

Which statement is true about the Conceptual Framework for Financial Reporting?

• The Conceptual Framework is not a Standard.
• The Conceptual Framework describes the objective of financial reporting and the concepts for general purpose financial statements.
• In cases of conflict, the requirements of the relevant IFRS prevail over those of the Conceptual Framework.
• All of these statements are true about the Conceptual Framework.

Which is not a purpose of the Revised Conceptual Framework?

• To assist the IASB to develop IFRS based on consistent concepts.
• To assist preparers to develop consistent accounting policy when no standard applies to a particular transaction or when Standard allows a choice of accounting policy.
• To assist all parties to understand and interpret the Standards.
• To assist regulatory agencies in issuing rules and regulations for a particular industry.

What provides "the why" or the goal and purpose of accounting?

• Measurement and recognition concept
• Qualitative characteristic of accounting information
• Element of financial statements
• Objective of financial reporting

The objective of financial reporting in the Conceptual Framework

• Is the foundation for the Conceptual Framework.
• Includes the qualitative characteristics that make accounting information useful.
• Is not found in the Conceptual Framework.
• All of the choices are correct regarding the objective of financial reporting.

The overall objective of financial reporting is to provide information

• That is useful for decision making
• About asset, liability and equity
• About financial performance
• That allows owners to assess management performance

Which statement is not a specific objective of financial reporting?

• To provide information that is useful in investment and credit decisions.
• To provide information about entity resources, claims against those resources and changes in those resources.
• To provide information on the liquidation value of an entity.
• To provide information that is useful in assessing cash flow prospects.

The assumption that an entity will not be sold or liquidated in the near future is known as

• Economic entity assumption
• Monetary unit assumption
• Time period assumption
• Going concern assumption

Which statement is an implication of the going concern assumption?

• The historical cost principle is credible.
• Depreciation and amortization policies are justifiable and appropriate.
• The current-noncurrent classification of assets and liabilities is justifiable and significant.
• All of these imply the going concern assumption.

The economic entity assumption

• Is inapplicable to unincorporated businesses
• Recognizes the legal aspects of business organizations
• Requires periodic income measurement
• Is applicable to all forms of business organizations

Consolidated financial statements are prepared when a parent-subsidiary relationship exists.

• Economic entity assumption
• Legal entity assumption
• Consolidation standard
• Neutrality