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WorksheetsAccounting Gaps - Accounting Theory
Total questions: 30
Worksheet time: 54mins
Is inventory measured at fair value, according to IAS 2?
Ofcourse!
No, it is always measured at cost
Only if the firm chooses so
None of the above
When is inventory being recognized as an expense?
When it is purchased
When it is sold
When it fair value decreases
Non of the above
The IASB justifies continuation of a cost-based approach on the grounds that 'inventory typically cannot be sold to a customer, except by making extensive use of the entity's other economic resources'. Is that principle consistent with other standards?
Yes
No
Please pick the correct statement:
The Framework defines the elements of the financial statements
The Framework does not provide recognition criteria for assets and liabilities
The framework is discussing the direct measurement of income or expenses
None of the above
Does the framework provide guidance on what pattern of consumption the depreciation process should reflect?
Yes
No
Maybe
One can claim that accelerated depreciation methods mimic fair value changes
True
False
The framework is being anchored first and foremost...
In the balance sheet
In the statement of comprehensive income
In the statement of cash flows
None of the above
Do the IFRS viewed as a high-quality standatds?
Yes
No
Please refer to the following statement: "The IFRS standards were developed largely outside of governmental bodies and were not designed primarily to meet political criteria or to correspond with tax accounting rules"
False
True
"The standards are largely designed to make financial statements reflect the legal form of a company's financial affairs"
True
False
"Greater use is made of cost accounting as we move forward in standards development"
True
False
"The standards are designed to help managers manipulate provisions in ways that are considered valid"
True
False
The expected benefits from implementing IFRS worldwide are:
Standardization of accounting rules
Reducing the cost of capital
Improving corporate governance
All of the above
1
2
3
4
The purpose of the conceptual framework is:
To assist the IASB 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
Revision of the Conceptual Framework will automatically lead to changes in Standards that are inconsistent with the revised concepts
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
None of the above
If an IFRS Standard sets out requirements that are inconsistent with the Conceptual Framework, preparers have to apply the Conceptual Framework for affected transactions.
True
False
Entities have to apply the revised Conceptual Framework:
Immediately after it is issued
For annual reporting periods beginning on or after 1 January of the subsequent year, with early application permitted.
Never - the Conceptual Framework is only used by the International Accounting Standards Board
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.
Which of the following does the Conceptual Framework identify as the primary users of general purpose financial reports?
Employees, investors and trade union representatives
Existing and potential investors, lenders and other creditors
Lenders and other creditors and customers
Existing and potential investors, government agencies and the general public
Information needed to assess management's stewardship is always different from information needed to assess the prospects for future net cash inflows to the entity.
True
False
How does the Conceptual Framework explain the role of stewardship?
Providing information needed to assess management's stewardship is identified as an additional objective of financial reporting, equal in prominence to providing financial information useful to users in making decisions relating to providing resources to the entity
Decisions relating to providing resources to the entity depend on users' assessment of the amount, timing and uncertainty of the prospects for future net cash inflows to the entity and on their assessment of management's stewardship
Providing information needed to assess stewardship is more important than providing information needed to assess the prospects for future cash inflows to the entity
Financial reports are not intended to provide information needed to assess stewardship
The fundamental qualitative characteristics of useful financial information are:
Comparability and relevance
Relevance and reliability
Relevance, reliability and comparability
Relevance and faithful representation
Comparability, relevance and faithful representation
For information to be relevant, it has to possess:
Only predictive value
Only confirmative value
Both predictive and confirmatory value
Either predictive or confirmatory value, or both
A trade-off between the fundamental qualitative characteristics of relevance and faithful representation may need to be made in order to meet the objective of financial reporting.
True
False
Consolidated financial statements provide information about the assets, liabilities, equity, income and expenses of both the parent and its subsidiaries as:
Separate reporting entities
A partnership
A single reporting entity
A legal entity
When a reporting entity is not a legal entity and does not comprise only legal entities all linked by a parent-subsidiary relationship, the boundary of the reporting entity can contain an incomplete set of economic activities if that entity provides a description of how the boundary was determined.
True
False
The Conceptual Framework defines a liability as:
A present obligation of the entity to transfer an economic resource as a result of past events
A present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodyiong economic benefits
An amount the entity may have to pay after the end of the reporting period
None of the above
