Question 1

Explain why accrual accounting is an important aspect of using the financial statements to assess past and future performance?

Accepted Answer

Using accrual accounting, the effects of transactions and other events and circumstances on a reporting entity's economic resources and claims are recognized in the periods in which those effects occur, and not in the period when the resulting cash receipts and payments occur. Thus, the true economic substance of different periods can be compared to assess true performance.

Question 2

General purpose financial reporting is directed at the information needs of

Accepted Answer

A)  Primary external users 
B)  All potential external users 
C)  Primary internal users 
D)  All internal users 
E)  Government entities 
A)  Primary external users 
B)  All potential external users 
C)  Primary internal users 
D)  All internal users 
E)  Government entities A

Question 3

Using the same accounting treatment for the same item in different periods is an example of

Accepted Answer

A)  Comparability 
B)  Consistency 
C)  Timeliness 
D)  Relevance 
A)  Comparability 
B)  Consistency 
C)  Timeliness 
D)  Relevance B

Question 4

Entity A expects to receive $5,000,000 in tax credits if it meets its emissions regulations in the upcoming year. Should this $5,000,000 be recognized as an asset in the current year?

Accepted Answer

A)  Yes 
B)  No 
A)  Yes 
B)  No

Question 5

The revaluation of an asset that gives rise to equity and meets the definition of income is included in income under IFRS.

Accepted Answer

A) True 
 B)False

Question 6

Entity A undergoes a transaction in which one asset increases by the amount that another asset decreases. Should this be considered income?

Accepted Answer

A)  Yes 
B)  No 
A)  Yes 
B)  No

Question 7

The principle of substance over form is no longer considered a separate component of faithful representation.

Accepted Answer

A) True 
 B)False

Question 8

What is materiality, and how does it relate to relevance?

Accepted Answer

The answer of What is materiality, and how does it...

Question 9

Entity A undergoes a transaction in the current period in which the assets of the entity increase by more than liabilities (causing an increase in equity). Should this be recognized as income?

Accepted Answer

A)  Yes 
B)  No 
A)  Yes 
B)  No

Question 10

Which of the following is not an aspect of relevant financial information?

Accepted Answer

A)  Predictive value 
B)  Neutrality 
C)  Confirmatory value 
D)  Materiality 
A)  Predictive value 
B)  Neutrality 
C)  Confirmatory value 
D)  Materiality

Question 11

If there is a conflict between a specific IFRS standard and the guidelines of the Conceptual Framework, the guidelines in the framework should take precedent over the specific IFRS standard.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is a pervasive restraint on an entity's ability to provide useful information?

Accepted Answer

A)  Legal restrictions 
B)  Management's desire to provide more information 
C)  Cost 
D)  Untrained personnel 
A)  Legal restrictions 
B)  Management's desire to provide more information 
C)  Cost 
D)  Untrained personnel

Question 13

What is faithful representation?

Accepted Answer

The answer of What is faithful representation?...

Question 14

Based on the definition of an expense, purchasing inventory should be considered an expense.

Accepted Answer

A) True 
 B)False

Question 15

An entity that has no plans or need to liquidate its operations is considered to be able to operate as a going concern.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is the process of determining the monetary amounts at which the elements of the financial statements are to be recognized in the financial statements?

Accepted Answer

A)  Calculation 
B)  Recognition 
C)  Measurement 
D)  Preparation 
A)  Calculation 
B)  Recognition 
C)  Measurement 
D)  Preparation

Question 17

"Free from error", one the aspects of faithfully represented information, means that the financial information is perfectly accurate.

Accepted Answer

A) True 
 B)False

Question 18

What is the overriding objective of general purpose financial reporting (according to the Framework)?

Accepted Answer

The answer of What is the overriding objective of general...

Question 19

Which of the following is not an enhancing qualitative characteristic of financial reporting?

Accepted Answer

A)  Timeliness 
B)  Comparability 
C)  Verifiability 
D)  Relevance 
A)  Timeliness 
B)  Comparability 
C)  Verifiability 
D)  Relevance

Question 20

Financial information that is capable of affecting the decision making of financial statement users is considered

Accepted Answer

A)  Relevant 
B)  Reliable 
C)  Comparable 
D)  Faithfully Represented 
A)  Relevant 
B)  Reliable 
C)  Comparable 
D)  Faithfully Represented

Exam 2: Conceptual Framework for Financial Reporting

Explain why accrual accounting is an important aspect of using the financial statements to assess past and future performance?

General purpose financial reporting is directed at the information needs of

Using the same accounting treatment for the same item in different periods is an example of

Entity A expects to receive $5,000,000 in tax credits if it meets its emissions regulations in the upcoming year. Should this $5,000,000 be recognized as an asset in the current year?

The revaluation of an asset that gives rise to equity and meets the definition of income is included in income under IFRS.

Entity A undergoes a transaction in which one asset increases by the amount that another asset decreases. Should this be considered income?

The principle of substance over form is no longer considered a separate component of faithful representation.

What is materiality, and how does it relate to relevance?

Entity A undergoes a transaction in the current period in which the assets of the entity increase by more than liabilities (causing an increase in equity). Should this be recognized as income?

Which of the following is not an aspect of relevant financial information?

If there is a conflict between a specific IFRS standard and the guidelines of the Conceptual Framework, the guidelines in the framework should take precedent over the specific IFRS standard.

Which of the following is a pervasive restraint on an entity's ability to provide useful information?

What is faithful representation?

Based on the definition of an expense, purchasing inventory should be considered an expense.

An entity that has no plans or need to liquidate its operations is considered to be able to operate as a going concern.

Which of the following is the process of determining the monetary amounts at which the elements of the financial statements are to be recognized in the financial statements?

"Free from error", one the aspects of faithfully represented information, means that the financial information is perfectly accurate.

What is the overriding objective of general purpose financial reporting (according to the Framework)?

Which of the following is not an enhancing qualitative characteristic of financial reporting?

Financial information that is capable of affecting the decision making of financial statement users is considered

Introduction to International Financial Reporting Standards Ifrs

Fair Value Measurement

Presentation of Financial Statements

Statement of Cash Flows

Accounting Policies, Estimates, and Errors

Events After the Reporting Period

Related Party Disclosures

Earnings Per Share

Operating Segments

Inventories

Financial Instrumentsrecognition and Measurement

Financial Instrumentspresentation

Financial Instrumentsdisclosures

Property, Plant, and Equipment

Intangible Assets

Investment Property

Impairment of Assets

Leases

Revenue From Contracts With Customers

Income Taxes

Employee Benefits

Share-Based Payments

Provisions, Contingent Liabilities, and Contingent Assets

The Effects of Changes in Foreign Exchange Rates

Hyperinflation

Business Combinations

Consolidated Financial Statements

Investments in Associates and Joint Ventures

Joint Arrangements

Disclosure of Interests in Other Entities

Separate Financial Statements

Interim Financial Reporting

Non-Current Assets Held for Sale and Discontinued Operations

Regulatory Deferral Accounts

Borrowing Costs

Accounting and Reporting by Retirement Benefit Plans

Accounting for Government Grants and Disclosure of Government Assistance

Insurance Contracts

Exploration for and Evaluation of Mineral Resources

Agriculture

First-Time Adoption of International Financial Reporting Standard

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