Exam 17: The Framework of Accounting

Under the AASB Framework,which of the following is NOT a primary qualitative characteristic of financial reporting?

Since Freda's Alterations has very few transactions each year,financial statements are only prepared for the bank every alternate year.This violates the reliability principle.

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:

Under AASB 101,which of the following is not required to be disclosed in the annual reports of ASX-listed companies?

In 2017,Amana sold 10 washing machines,which cost $700 each,for a price of $1 300 each.All sales are made on credit and $7 000 was collected in 2017.Using the sales method,how much gross profit will Amana recognise in 2017?

Which of these items must be disclosed in general purpose financial reports under AASB 101?

The presumption is that a material item is one that is ________ of an appropriate base amount.

AASB 110 refers to subsequent events that relate to conditions that have arisen after the reporting date.Such events,if they could influence decision making:

Saunders Hardware sells on the instalment plan.Sales-related figures for Saunders Hardware for 2017 were as follows: sales,$600 000;down payments on the sales,$60 000;collections on instalments,$250 000;beginning inventory,$90 000;ending inventory $60 000;and purchases,$400 000.What is Saunders Hardware's gross profit using the sales method of income recognition?

The Global Reporting Initiative (GRI)is a worldwide,network-based organisation that produces a comprehensive sustainability reporting framework that is widely used globally.

A conceptual framework of accounting is intended to eliminate the need for detailed accounting standards.

Which business would be most likely to use the percentage of completion method to record income?

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.

Helen Hines,Solicitor,performed bankruptcy services for a client and billed the full fee of $6 000 on 20 September 2017.Hines is uncertain if she will collect the fee.At 31 December 2017,she had collected $900 and in 2018 has collected an additional $2 000.How much service revenue should Hines report in 2017 and 2018,respectively?

Management relies much more on special purpose reports rather than the general-purpose information needed by external users.

Accountants generally make no adjustments for changes in the value of the dollar.

A business decides to expense the cost of minor repair tools rather than capitalise them.This is an example of which principle?

Three of the qualitative characteristics listed in the AASB Framework are:

On 1 April 2017,Babies Unlimited sold a crib with accessories,which cost $1 000,for $1 500.It was sold for 10% deposit,with the balance to be paid in six equal payments beginning on 1 May 2017.How much sales revenue is recognised in the calendar year 2017 under the instalment method?

The materiality principle requires that financial statements should tend to understate rather than overstate net assets in the face of uncertainty.