A1 - Conceptual Framework

Question 1

Conceptual Framework - Overriding objective of financial reporting?

Answer 1

Decision usefulness

Question 2

Conceptual Framework - 2 Primary Qualitative Characteristics?

Answer 2

FAR+R - Faithful Representation & Relevance

Question 3

Conceptual Framework - What are the 3 ingredients of the primary characteristic Faithful Representation?

Answer 3

Faithful Rep (CNF) - Complete, neutral & free from errors.

Question 4

Conceptual Framework - What does Relevance mean?

Answer 4

Does it relate to my decision? Helps predict & confirm and is material to my decision.

Question 5

Conceptual Framework - What does Faithful Rep. mean?

Answer 5

Can I depend on it?

Question 6

Conceptual Framework - 4 Enhancing Qualitative Characteristics?

Answer 6

Comparability, Verifiability, Timeliness & Understandabillity

Question 7

Conceptual Framework - Are accounting concepts GAAP?

Answer 7

No, the Accounting Concepts aren’t GAAP. They guide the standard setting process.

Question 8

Conceptual Framework - What are the 3 ingredients of the primary characteristic Relevance?

Answer 8

Relevance - Predictive, confirmatory & material (info that could influence my decision.)

Question 9

Conceptual Framework - What is the process of reporting an item in the financial statements of an entity?

Answer 9

Recognition