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CFAS > Chapter 2 > Flashcards

Chapter 2 Flashcards

1
Q

A contract, or a portion of a contract, that is equally unperformed neither party has fulfilled any it’s obligations, both parties having partially fulfilled their obligations to an equal extent

A

Executory contract

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2
Q

The adding together of assets, liabilities, equity, income or expense that have shared characteristics and are included in the same classification

A

Aggregation

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3
Q

A present economic resource controlled by the entity as a result of past events

A

Asset

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4
Q

The amount of which an asset, a liability or equity is recognized in the statement of financial position

A

Carrying amount

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5
Q

The sorting of assets, liabilities, equity, income or expense on the basis shared characteristics for presentation and disclosures purposes

A

Classification

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6
Q

Financial statements of a reporting entity that comprises two or more entities that are not all linked by a parent - subsidiary relationship

A

Combined Financial Statement

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7
Q

Financial statements of a reporting entity that comprises both the parent and it’s subsidiaries

A

Consolidated Financial Statement

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8
Q

The present ability to direct the use of the economic resource and obtain the economic benefits that may flow from it

A

Control an economic resource

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9
Q

The removal of all or part of recognized asset or liability from an entity’s statement of financial position

A

Derecognition

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10
Q

A right that has the potential to produce economic benefits

A

Economic Resource

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11
Q

A qualitative characteristics that makes useful information more useful. These comparability, verifiability, timeliness and understanding

A

Enhancing qualitative characteristic

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12
Q

The residual interest in the assets of the entity after deducting all it’s liabilities

A

Equity

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13
Q

A claim on the residual interest in the assets of the entity after deducting all it’s liabilities

A

Equity claim

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14
Q

Uncertainty about whether an asset or liability exists

A

Existence uncertainty

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14
Q

A report that provides financial information about the reporting entity’s economic resources, claims against the entity and changes in those economic resources and claims that is useful to primary users in making decisions relating to providing resources to the entity

A

General purpose financial report

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14
Q

Increases in assets or decreases in liabilities, that result in increases in equity, other than those relating to contributions from holders of equity claims

A

Income

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15
Q

Decreases in assets, or increases in liabilities, that result in decreases in equity, other than those relation to distribution ps to holders of equity claims

A

Expenses

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15
Q

A qualitative characteristics that financial information must possess to be useful to the primary users of general purpose financial reports. These are relevance and faithful representation

A

Fundamental qualitative characteristics

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16
Q

A present obligation of the entity to transfer an economic resource as a result of past events

A

Liability

16
Q

Information whose omission or misstatement could influence decisions that primary users of general-purpose financial reports

A

Material information

17
Q

The result of applying a measurement basis to an asset or liability and related income and expenses

A

Measure

18
Q

An identified feature- for example, historical cost, fair value or fulfillment value - of an item being measured

A

Measurement basis

19
Q

Uncertainty that arises when monetary amounts in financial reports cannot be observed directly and must instead be estimated

A

Measurement uncertainty

20
Q

Grouping an asset and liability that are recognized and measured as separate units of account into a single net amount in the statement of financial position

A

Offsetting

21
Q

Uncertainty about the amount or timing of any inflow or outflow of economic benefits that will result from an asset or liability

A

Outcome uncertainty

22
Q

Within an economic resource, a feature that already exist and that, in at least one circumstances, would produce for the entity economic benefits beyond those available to talk other parties

A

Potential to produce economic benefits

23
Q

These are existing and potential investors, lenders and other creditors

A

Primary users (of general purpose financial reports)

24
Q

The exercise of caution when making judgements under conditions of uncertainty. The exercise of produce means that assets and income are not overstated. Equally, the exercise of prudence does not allow for the understatement of assets or income or the overstatement of liabilities or expenses.

A

Prudence

25
Q

The process of capturing for inclusion in the statement of financial position or statement (s) of financial performance an item that meets the definition of one of the elements of financial statements - an asset, a liability, equity, income or expenses. Recognition involves depicting the item in one of those statements - either alone or in aggregation with other items - in words and by a monetary amount, and including that amount in one or more totals in that statement

A

Recognition

26
Q

An entity that is required, or chooses to prepare general, purpose financial statements

A

Reporting entity

27
Q

Financial statements of a reporting entity that is the parent alone

A

Unconsolidated financial statements

28
Q

The right or the group of rights, the obligation or the group of obligations, or the group of right and obligations, to which recognition criteria and measurement concepts are applied

A

Unit of account

29
Q

Financial information that is useful to primary users general purpose financial reports in making decisions relating to providing resources to the reporting entity. To be useful, financial information must be relevant and faithfully represent what it purports to represent

A

Useful financial information

30
Q

What is the purpose of conceptual framework

A

Assist the IASB (Board) to develop consistent accounting policies on consistent concepts
(2) Assist the preparers to develop consistent accounting policies when no standard applies to a particular transaction or other event, or when a standard allows a choice of accounting policy and
Assist all parties to understand and interpret the standards

31
Q

What is the objective of general purpose financial reporting

A

The objective of general purpose financial reporting is to provide financial information about the reporting entity that is useful to existing and potential investors, lenders and other creditors in making decisions relating to providing resources to the entity

31
Q

What is the foundation of conceptual framework

A

Is the objective of general purpose financial reporting

32
Q

What are the elements of financial statements

A

Asset, liability, equity, income and expense

32
Q

Give examples of rights that corresponds to an obligation of another party

A

Rights to receive cash, goods or services, to exchange economic resources with another party on favorable terms a d benefit from obligation of another party to transfer an economic resource if a specified uncertain future event occur.

32
Q

Enumerate the qualitative characteristics of useful information

A

Fundamental characteristics are relevance and faithful representation. Enhancing characteristics are comparability, verifiability, timeliness and understanding

33
Q

Give examples of rights that do not corresponds to an obligation of another entity

A

Rights over physical object and the right to use intellectual property

34
Q

What are the three criteria of a liability

A

Obligation, economic resource and obligating event

34
Q

What are the three criteria of an asset

A

Rights, potential to produce economic benefits and control

35
Q

Enumerate the two measurement basis

A

Historical cost measurement bases and current value measurement bases (fair value, value in use or fulfillment value and current cost)

36
Q

What are the three characteristics of faithful representation

A

Completeness, neutrality and free from error

37
Q

What is the difference between comparability and consistency

A

Comparability is the qualitative characteristics that enables users to identify and understand similarities and differences among items while consistency is the use of the same methods for the same items the goal while consistency hells to achieve the goal

38
Q

What is the most pervasive constraint on the entity’s ability to provide useful information

A

Cost

39
Q

What are the criteria for recognizing an element of financial statement

A

It meets the definition of an element
The information is relevant and faithfully represented

CFAS (5 decks)

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