1- Basic Concepts & Framework for Accounting & IFRS

Question 1

Objectives of Financial Reporting

Answer 1

1-to provide information that is useful to existing and potential investors, lenders and other creditors in making decisions about providing resources to the entity
2-Information about a reporting entity’s economic resources and claims against the entity (Financial position-B/S)

Question 2

Primary Qualitative Characteristics

Answer 2

1-Relevances (PCM): Predictive value, Confirmatory Value, and Materiality
2-Faithful Representation (FENC): Free from Error, Neutrality and completeness

Question 3

Enhancing Qualitative Characteristics

Answer 3

Roger is CUT like V
1-Comparability (Consistency) 
2-Understandability 
3-Timeliness 
4-Verifiability

Question 4

Elements of Monetary Terms

Answer 4

• Historical Cost- amount you paid for it (PP&E)
• Replacement Cost- what it would cost to replace an item (inventory)
• Fair Market Value (FMV)- the price received to sell an asset or paid to transfer a liability
• Net Realizable Value (NRV)- amount expected to be converted or received
• Present Value (PV)- discounted cash flows due to the time value of money

Question 5

Measure Fair Value

Answer 5

(MIC)
Market Approach-uses prices and relevant information from market transactions for identical or comparable assets/liabilities
Income Approach- uses present value techniques to discount cash flows or earnings
Cost Approach- uses current replacement cost

Question 6

Accounting Changes

Answer 6

Change in Accounting estimated- Prospective
Change in Accounting Principle- Retrospectively with an adjustments ti beginning retained earnings
Change in Accounting Entity- Restate