Question 1

Which of these is not an essential characteristic of a liability under the Framework?

Accepted Answer

A)  Future sacrifice of economic benefits 
B)  Control 
C)  Existence of a present obligation to another entity 
D)  A past transaction or other past event 
A)  Future sacrifice of economic benefits 
B)  Control 
C)  Existence of a present obligation to another entity 
D)  A past transaction or other past event

Question 2

Under the Framework a 'material' item must be:

Accepted Answer

A)  likely to influence the decisions of users 
B)  unusual 
C)  large 
D)  all of the above 
A)  likely to influence the decisions of users 
B)  unusual 
C)  large 
D)  all of the above

Question 3

An entity has decided to commit itself to the purchase of a new building in the next financial year.Under the Framework:

Accepted Answer

A)  a liability exists because it is probable that a future sacrifice of economic benefits will be required 
B)  no liability exists because there is no present obligation 
C)  a liability exists because there is a constructive obligation 
D)  a liability exists because there is an equitable obligation 
A)  a liability exists because it is probable that a future sacrifice of economic benefits will be required 
B)  no liability exists because there is no present obligation 
C)  a liability exists because there is a constructive obligation 
D)  a liability exists because there is an equitable obligation

Question 4

In the Framework,'the present obligation of the entity arising from past events,the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits' is the definition of:

Accepted Answer

A)  revenues 
B)  assets 
C)  expenses 
D)  liabilities 
A)  revenues 
B)  assets 
C)  expenses 
D)  liabilities

Question 5

Which of these statements is correct?

Accepted Answer

A)  Simplified financial reports will always be the most understandable 
B)  A relevant and reliable item will always be material 
C)  Relevance and reliability can never be in conflict 
D)  It is apparent from the Framework that general purpose financial reports are addressed to users with a reasonable knowledge of business and economic activities 
A)  Simplified financial reports will always be the most understandable 
B)  A relevant and reliable item will always be material 
C)  Relevance and reliability can never be in conflict 
D)  It is apparent from the Framework that general purpose financial reports are addressed to users with a reasonable knowledge of business and economic activities

Question 6

In the Framework's definition of expenses:

Accepted Answer

A)  there is no distinction between expenses and losses 
B)  expenses must be matched against income 
C)  the causes of expenses are specifically identified 
D)  if the definition is satisfied the item must be recognised in the financial statements 
A)  there is no distinction between expenses and losses 
B)  expenses must be matched against income 
C)  the causes of expenses are specifically identified 
D)  if the definition is satisfied the item must be recognised in the financial statements

Question 7

Depreciation and wages that have been accrued represent,respectively,expenses resulting from:

Accepted Answer

A)  a decrease in an asset: a decrease in a liability 
B)  the using up of an asset: an increase in a liability 
C)  the using up of a liability: an increase in an asset 
D)  none of the above 
A)  a decrease in an asset: a decrease in a liability 
B)  the using up of an asset: an increase in a liability 
C)  the using up of a liability: an increase in an asset 
D)  none of the above

Question 8

Identify and discuss three possible conflicts between the Framework's list of qualitative characteristics.

Accepted Answer

One possible conflict between the Framew

Question 9

The Framework defines assets as:

Accepted Answer

A)  resources controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity 
B)  probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events 
C)  the service potential expected from resources controlled by the reporting entity as a result of past events 
D)  future economic benefits expected from resources controlled by the reporting entity as a result of past events 
A)  resources controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity 
B)  probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events 
C)  the service potential expected from resources controlled by the reporting entity as a result of past events 
D)  future economic benefits expected from resources controlled by the reporting entity as a result of past events

Question 10

Under the Framework,profit is defined as:

Accepted Answer

A)  an increase in 'well-offness' 
B)  a matter of display 
C)  an increase in wealth 
D)  including all changes in equity occurring during a period 
A)  an increase in 'well-offness' 
B)  a matter of display 
C)  an increase in wealth 
D)  including all changes in equity occurring during a period

Question 11

Under the Framework,which of these is not an essential characteristic of an expense?

Accepted Answer

A)  It must result in a decrease in equity 
B)  It must represent a flow 
C)  It must be associated with the earning of revenue 
D)  It must take the form of a decrease in an asset or an increase in a liability 
A)  It must result in a decrease in equity 
B)  It must represent a flow 
C)  It must be associated with the earning of revenue 
D)  It must take the form of a decrease in an asset or an increase in a liability

Question 12

Under the Framework,a transport company does not regard the road outside its premises as an asset because:

Accepted Answer

A)  it is not owned 
B)  it will not provide future economic benefits 
C)  the amount of future economic benefits is uncertain 
D)  it is not controlled 
A)  it is not owned 
B)  it will not provide future economic benefits 
C)  the amount of future economic benefits is uncertain 
D)  it is not controlled

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

Which of these is not an essential characteristic of a liability under the Framework?

Under the Framework a 'material' item must be:

An entity has decided to commit itself to the purchase of a new building in the next financial year.Under the Framework:

In the Framework,'the present obligation of the entity arising from past events,the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits' is the definition of:

Which of these statements is correct?

In the Framework's definition of expenses:

Depreciation and wages that have been accrued represent,respectively,expenses resulting from:

Identify and discuss three possible conflicts between the Framework's list of qualitative characteristics.

The Framework defines assets as:

Under the Framework,profit is defined as:

Under the Framework,which of these is not an essential characteristic of an expense?

Under the Framework,a transport company does not regard the road outside its premises as an asset because:

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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