Exam 2: Types of Organisations and the Financial Reporting Framework

A reporting entity is an entity for which there are users who rely on financial statements as their major source of information about the entity.

Users of general-purpose financial reports include investors, financial advisors, employees, lenders, suppliers and customers.

Which of the following types of entities would not fit the category of a profit-making entity?

If the conceptual framework sets out the concepts that underlie the preparation and presentation of financial statements for external users, which of the following questions is the conceptual framework not attempting to answer?

Half-yearly reports contain more detailed information than annual reports.

All companies can raise funds through the general public but not all companies have limited liability.

Assets are best defined as a:

Which one of the following is not an asset?

An advantage that a company typically has over a partnership is:

The directors' report included with a company's financial statements contains an opinion on whether the financial statements and notes comply with accounting standards, and give a true and fair view of the financial position and performance of the company.

The fundamental element equity does not require recognition criteria, because it represents the residual interest in assets, after deducting liabilities.

The relationship between the task undertaken by auditors and the understanding of the users is called:

In Australia the overriding responsibility for the preparation and presentation of general-purpose reports resides with the directors of a company.

Although partnerships may have a tax advantage over companies in that it is the partners that are taxed and not the partnership, a disadvantage of partnerships is that they have unlimited liability.

The elements of financial statements are always measured using the historical cost method.

A liability must always be a legal obligation that arises from past events.

Which of the following is not a liability?

One of the objectives of a Conceptual Framework is that it is considered to be a defence against politicisation.

Equity is the residual interest in the assets of the entity after deduction of all its liabilities.

Revenues result when a business: