Exam 17: The Framework of Accounting

Under the percentage of completion method, which is used to record profit on assets that take several years to construct, profit is reported as the instalments of contract income that are received.

In Australia, in recent years, there has been a move to show some assets at current cost rather than at historical cost. This is because the need for relevancy sometimes outweighs the requirement for reliability.

Under the AASB Framework, income includes both revenue and gains.

Which of the following statements is false?

Australia adopted international accounting standards from 2005.

A specific exception to the use of historical cost to value assets is if the net realisable value of inventories falls below cost. In this case the justification for the use of market value rather than cost relies on the:

The principle that accountants do not have to account for every last item in strict accordance with the accounting rules is known as the:

When a $100 000 sale of a yacht is made by accepting a $10 000 down payment and nine future yearly payments of $10 000 each, profit will most likely be recognised using the:

Timeliness means reporting information without undue delay.

AASB 101 requires a summary of significant accounting policies to be included in the director's report which accompanies the financial statements.