Question 1

What does the political legitimacy argument,as outlined by Hines (1991),suggest?

Accepted Answer

A)  The accounting profession consists of experts in technical knowledge of accounting, and therefore should be given authority to regulate accounting 
B)  The accounting profession used the development of the conceptual framework as a strategy to promote their self-regulation interests 
C)  The Conceptual Framework provides the authority to resolve technical issues with authority and legitimacy 
D)  As users are politically involved in developing the Conceptual Framework, the outcome has political legitimacy

Question 2

Which of the following cannot be concluded from an overview of the history of the development of conceptual framework projects?

Accepted Answer

A)  A number of countries have successfully completed conceptual framework projects 
B)  Those responsible for them have either been reluctant to promote significant changes, or the changes suggested have not been accepted 
C)  Conceptual framework projects have been reluctant to prescribe a particular valuation or measurement approach 
D)  The conceptual framework is a continuous and evolving project

Question 3

What is the objective of financial reporting,as stated in the IASB Framework for the Preparation and Presentation of Financial Reports,and consistent with the Australian SAC 2: Objectives of Financial Reporting?

Accepted Answer

A)  Stewardship 
B)  Accountability 
C)  Decision usefulness 
D)  All of the given options are correct

Question 4

According to the IASB definition of 'income',which of the following is not included?

Accepted Answer

A)  Non-reciprocal transfers such as grants, bequests or liabilities forgiven 
B)  Gains and losses from the sale of assets 
C)  Enhancement of assets 
D)  Dividends received

Question 5

On what is a 'reporting entity',as defined in SAC 1,dependent?

Accepted Answer

A)  Whether there are users that are dependent on the reports to make or evaluate resource decisions 
B)  Professional judgment providing some guidelines to help make a decision 
C)  Whether there are users that are dependent on the reports to make or evaluate resource decisions, and professional judgement provides some guidelines to help make a decision 
D)  The Corporations Law based on measures of gross revenue, dollar value of assets and the number of employees

Question 6

The objective of general purpose financial reporting is stated in most conceptual frameworks as providing decision-useful information to users of financial reports.Which of the following are not regarded as legitimate users of financial reports according to the IASB Framework?

Accepted Answer

A)  Users without some proficiency in financial accounting 
B)  Recipients of goods and services 
C)  Special interest groups in the general public 
D)  All of the given options are correct

Question 7

Which of the following is a characteristic of reliability?

Accepted Answer

A)  It influences economic decisions 
B)  It represents faithfully what it purports to represent 
C)  It provides predictive value and feedback to confirm or correct earlier expectations 
D)  None of the given options are correct

Question 8

Which of the following is not a characteristic of a liability,according to the IASB Framework?

Accepted Answer

A)  A future deposition or transfer of economic benefits to others 
B)  A past transaction or event to have created the obligation 
C)  There must be a legal obligation 
D)  None of the given options are correct

Exam 6: Normative Theories of Accountingthe Case of Conceptual Framework Projects

What does the political legitimacy argument,as outlined by Hines (1991) ,suggest?