Exam 2: The Conceptual Framework of Accounting and Its Relevance to Financial Reporting

The Framework's recognition criteria provides that 'an asset is recognised in the balance sheet when it is ________ that the future economic benefits will flow to the entity and the asset has a cost or value that can be measured __________'.

Which of the following statement(s)is/are true with respect to materiality?

The Blaxland Ltd filed a lawsuit against D-Mart Machineries for failure to comply with the specifications of the factory equipment that they ordered and received.The solicitors for Blaxland Ltd strongly believe that the company will receive $50 000 to $100 000 if they win the case.Which action is consistent with the Framework?

What guidelines are available in AASB 1031 'Materiality' to assist in determining the materiality of an item?

The Framework identifies two aspects to financial information that are 'relevant'.These are:

Relevance and faithfully represented characteristics are placed as overriding qualities of financial statements over other qualitative characteristics

For the preparation and presentation of financial statements,Australia adopts the IASB Framework and the Statement of Accounting Concepts 1 to 4.

The IASB Conceptual Framework adopts which approach to determining profits?

The AASB Framework is considered to be an Australian Accounting Standards Board (AASB)standard.

In accordance with IASB Conceptual Framework which of the following accounts are expenses?

Faithful presentation is one on the two primary fundamental qualitative characteristics for financial information to be useful.According to the IASB Conceptual Framework a financial report is faithfully presented if it is:

The accountant of Broken Bay Ltd decided to retain the historical cost of the entity's intangible assets because it was difficult to obtain fair value of these assets.This action is consistent with ____________.

Which of the following statements most accurately reflects the qualitative characteristics of financial information in the IASB Conceptual Framework?

'Liabilities that are legally enforceable and equitably or constructively unavoidable must be recognised if they can be measured reliably'.Discuss.

When an AASB standard conflicts with the Framework,the former prevails.

Which of the following items is not considered an asset?

The audit of Liverpool Ltd had been completed and the audit senior for the engagement prepared items for discussion.He argues that the following list of accounting changes violate the consistency qualitative characteristic of accounting information.As audit manager,which of the following items do you think are worthy of discussion with the audit partner?

The objective of financial statements is to provide future oriented information to help investors make business decisions.

When a standard restricts the number of accounting methods to be used to account for a particular accounting issue,it is promoting the qualitative characteristic of ______________?

Discuss issues covered by IASB and the US FASB with respect to measurement principles in the development of a common conceptual framework.