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

Relevance and reliability characteristics are placed as overriding qualities of financial statements over other qualitative characteristics:

In accordance with AASB framework which of the following is consistent with the definition of income?

The trade-off between relevance and reliability requires exercise of judgment constrained by timeliness and costs versus benefits.

The Framework adopts which approach to determining profits.

In adopting the standards of IASB,Australian entities are required to comply with:

Which of the following actions best describes the qualitative characteristic "relevance"?

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

The key characteristics of an asset as defined in the Framework includE.

Which of the following statement(s)is/are true of the qualitative characteristic "comparability"?

The AASB Framework has the force of law:

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 ______________?

Which of the following transactions does not meet the definition of an asset?

The audit of the financial reports of Matilda Ltd had been completed except for the outcome of a material contingent liability that is still subject to the outcome of a court decision.The case is still ongoing and but it is expected that a decision will be made after three months.The deadline for submitting the financial reports is next month.Which action is consistent with the notion of "timeliness" in the preparation of financial reports?

Faithful presentation is one on the two primary fundamental qualitative characteristics for financial information to be useful as proposed in the Exposure Draft released as part of the joint initiative of the IASB and US FASB.A financial report is faithfully presented if it is:

In accordance with AASB framework which of the following is consistent with the definition of expenses?

The Framework defines principles for a specific accounting recognition,measurement and disclosure matter:

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 __________.

A separate recognition criteria for equity is not set forth in the Framework because it represents a residual interest in the assets of an entity.

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

Mr and Mrs K Urban are partners in Urban Ltd a music shop with sales revenue of $5,000,000 per annum,total assets of $10,000,000 and employees totalling 15.Blank Ltd is: 1.a reporting entity because there are at least two users of a financial report. 2.not likely to be a reporting entity because it is unlikely to have users dependent on its financial reports. 3.likely to be a reporting entity because there are two shareholders and it is an exempt proprietary entity. 4.not a reporting entity because small proprietary companies are frequently not considered reporting entities. 5.is a reporting entity because total assets of the entity is greater than $5,000,000.