Question 1

SAC3 arranges the qualitative characteristics in three levels:

Accepted Answer

A)  fundamentals, presentation, display 
B)  fundamentals, enforcement, display 
C)  fundamentals, enhancing, constraints 
D)  assets, liabilities, owners' equity 
A)  fundamentals, presentation, display 
B)  fundamentals, enforcement, display 
C)  fundamentals, enhancing, constraints 
D)  assets, liabilities, owners' equity C

Question 2

Under the framework financial information that assists in either confirmation of past predictions or in making new predictions is:

Accepted Answer

A)  relevant 
B)  timely 
C)  comparable 
D)  none of the above 
A)  relevant 
B)  timely 
C)  comparable 
D)  none of the above A

Question 3

In Australia,income is limited to:

Accepted Answer

A)  revenue and gains 
B)  revenue and expenses from the delivery or production of goods and services 
C)  revenues and expenses from ongoing normal operations 
D)  any transaction that results in an increase in equity 
A)  revenue and gains 
B)  revenue and expenses from the delivery or production of goods and services 
C)  revenues and expenses from ongoing normal operations 
D)  any transaction that results in an increase in equity A

Question 4

The recognition of an element of a financial statement is:

Accepted Answer

A)  a description of the element in the notes to the financial statement 
B)  an action or process to record the transaction or event in the accounting records 
C)  a statement identifying the characteristics that an element must have 
D)  both A and C 
A)  a description of the element in the notes to the financial statement 
B)  an action or process to record the transaction or event in the accounting records 
C)  a statement identifying the characteristics that an element must have 
D)  both A and C

Question 5

The constraint(s)on relevant,reliable,material,understandable and comparable information is/are:

Accepted Answer

A)  verifiability 
B)  timeliness 
C)  cost/benefit 
D)  B and C 
A)  verifiability 
B)  timeliness 
C)  cost/benefit 
D)  B and C

Question 6

Attributes of relevant information include:

Accepted Answer

A)  a faithful representation of transaction 
B)  a faithful representation of the economic effect of the transaction 
C)  neither A nor B 
D)  both A and B 
A)  a faithful representation of transaction 
B)  a faithful representation of the economic effect of the transaction 
C)  neither A nor B 
D)  both A and B

Question 7

The Framework definition of revenue (income)differs in which important aspect from the FASB definition?

Accepted Answer

A)  In some circumstances it includes contributions by owners as revenue 
B)  It includes a reduction in liabilities as one of the forms that revenue can take 
C)  It defines revenue as an inflow 
D)  It does not identify the sources of the revenue 
A)  In some circumstances it includes contributions by owners as revenue 
B)  It includes a reduction in liabilities as one of the forms that revenue can take 
C)  It defines revenue as an inflow 
D)  It does not identify the sources of the revenue

Question 8

'That quality of financial information which exists when that information can be depended upon to represent faithfully,and without bias or undue error,the transactions or events that it purports to represent or could reasonably be expected to represent' (The Framework para.31),is:

Accepted Answer

A)  understandability 
B)  reliability 
C)  timeliness 
D)  comparability 
A)  understandability 
B)  reliability 
C)  timeliness 
D)  comparability

Question 9

In Australia under the conceptual framework,which of the following is not an identifiable element of financial statements?

Accepted Answer

A)  Liabilities 
B)  Assets 
C)  Profit 
D)  None of the above, i.e., all are identifiable elements 
A)  Liabilities 
B)  Assets 
C)  Profit 
D)  None of the above, i.e., all are identifiable elements

Question 10

The two principle ingredients of relevance specified by the Framework are:

Accepted Answer

A)  confirmation and reliability 
B)  confirmation and prediction 
C)  accountability and stewardship 
D)  reliability and prediction 
A)  confirmation and reliability 
B)  confirmation and prediction 
C)  accountability and stewardship 
D)  reliability and prediction

Question 11

Under the Framework,the purchase of inventory by an entity is:

Accepted Answer

A)  an expense as it decreases equity 
B)  an expense as it arises from carrying out the major activities of the entity 
C)  an expense because it is a flow 
D)  not an expense 
A)  an expense as it decreases equity 
B)  an expense as it arises from carrying out the major activities of the entity 
C)  an expense because it is a flow 
D)  not an expense

Question 12

Which statement is incorrect?

Accepted Answer

A)  Net assets, net worth, shareholders' equity and proprietorship are all synonyms for equity 
B)  The settlement of a liability by the owner from his private funds results in an increase in equity 
C)  Under the Framework equity exists only because there are assets and liabilities 
D)  None of the statements is incorrect, i.e., all are correct 
A)  Net assets, net worth, shareholders' equity and proprietorship are all synonyms for equity 
B)  The settlement of a liability by the owner from his private funds results in an increase in equity 
C)  Under the Framework equity exists only because there are assets and liabilities 
D)  None of the statements is incorrect, i.e., all are correct

Question 13

Is taxation an expense under the Framework? Discuss.

Accepted Answer

Taxation is not considered an expense un

Question 14

The key characteristic used by the Framework to define an asset is:

Accepted Answer

A)  saleability 
B)  type of item 
C)  ability to generate future economic benefits 
D)  ability to generate future cash flows 
A)  saleability 
B)  type of item 
C)  ability to generate future economic benefits 
D)  ability to generate future cash flows

Question 15

Compare and contrast the FASB definition of revenue and the Australian concept of income.In your answer discuss the treatment of gains in both jurisdictions.

Accepted Answer

The Financial Accounting Standards Board

Question 16

Under the Framework,which of these statements is correct?

Accepted Answer

A)  A distinction is made between profit and gains 
B)  Profit is not defined independently of income and expenses 
C)  Profit is defined as the amount that can be distributed as a dividend whilst maintaining capital intact 
D)  None of the statements is correct 
A)  A distinction is made between profit and gains 
B)  Profit is not defined independently of income and expenses 
C)  Profit is defined as the amount that can be distributed as a dividend whilst maintaining capital intact 
D)  None of the statements is correct

Question 17

Explain and discuss three essential characteristics of an asset as defined by the Framework.

Accepted Answer

The answer of Explain and discuss three essential characteristics of...

Question 18

In 1980 the FASB issued SFAC2,'Qualitative Characteristics of Accounting Information' which differed from its predecessors by:

Accepted Answer

A)  including extra characteristics 
B)  calling for the harmonisation of different versions of the characteristics 
C)  dropping several characteristics 
D)  arranging the characteristics in a hierarchy 
A)  including extra characteristics 
B)  calling for the harmonisation of different versions of the characteristics 
C)  dropping several characteristics 
D)  arranging the characteristics in a hierarchy

Question 19

Information that is free from bias is regarded as:

Accepted Answer

A)  timely 
B)  reliable 
C)  understandable 
D)  material 
A)  timely 
B)  reliable 
C)  understandable 
D)  material

Question 20

A Regulation Impact Statement is prepared by the AASB.This statement:

Accepted Answer

A)  provides a cost-benefit analysis of the proposed new standard 
B)  must be prepared by the AASB before any new standards are released 
C)  ensures that information contained in the financial statements is timely and material 
D)  both A and B 
A)  provides a cost-benefit analysis of the proposed new standard 
B)  must be prepared by the AASB before any new standards are released 
C)  ensures that information contained in the financial statements is timely and material 
D)  both A and B

Exam 3: A Conceptual Framework: the Fundamentals of General Purpose Financial Reporting

SAC3 arranges the qualitative characteristics in three levels:

Under the framework financial information that assists in either confirmation of past predictions or in making new predictions is:

In Australia,income is limited to:

The recognition of an element of a financial statement is:

The constraint(s)on relevant,reliable,material,understandable and comparable information is/are:

Attributes of relevant information include:

The Framework definition of revenue (income)differs in which important aspect from the FASB definition?

'That quality of financial information which exists when that information can be depended upon to represent faithfully,and without bias or undue error,the transactions or events that it purports to represent or could reasonably be expected to represent' (The Framework para.31),is:

In Australia under the conceptual framework,which of the following is not an identifiable element of financial statements?

The two principle ingredients of relevance specified by the Framework are:

Under the Framework,the purchase of inventory by an entity is:

Which statement is incorrect?

Is taxation an expense under the Framework? Discuss.

The key characteristic used by the Framework to define an asset is:

Compare and contrast the FASB definition of revenue and the Australian concept of income.In your answer discuss the treatment of gains in both jurisdictions.

Under the Framework,which of these statements is correct?

Explain and discuss three essential characteristics of an asset as defined by the Framework.

In 1980 the FASB issued SFAC2,'Qualitative Characteristics of Accounting Information' which differed from its predecessors by:

Information that is free from bias is regarded as:

A Regulation Impact Statement is prepared by the AASB.This statement:

Institutional Arrangements for Setting Accounting Standards in Australia

A Conceptual Framework: Scope, reporting Entity and the Objective of Financial Report

A Conceptual Framework: Recognition and Measurement of the Elements of Financial Statements

The Choice of Accounting Methods

The Balance Sheet: an Overview

Accounting for Current Assets

Accounting for Property, plant and Equipment

Accounting for Company Income Tax

Accounting for Investments

Accounting for Intangible Assets

Accounting for Leases

Accounting for Employee Benefits

Accounting for Financial Instruments

Equity

The Income Statement

The Cash Flow Statement

Financial Reporting: Segment Reporting, value Added Statements, highlights Statements and Future-Oriented Financial Information

Further Financial Reporting Issues

Accounting for the Extractive Industries

Accounting for Real Estate Development and Construction Contracts

Accounting for Agricultural Activity

Accounting for Superannuation Plans

Accounting for Financial Institutions

Financial Reporting in the Public Sector

International Accounting Standards, harmonisation and Convergence

Foreign Currency Translation

Accounting for Corporate Social Responsibilities

Ethics in Accounting

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