Chp 7: Principles and concepts

Question 1

Qualitative characteristics

Answer 1

Fundamental
Enhancing

Question 2

Fundamental characteristics

Answer 2

Relevance - information is relevant when it can make a difference to the economic decisions of the users. Relevant information helps users to assess past, present or future events (predictive value) and helps users to confirm past events (confirmatory value).

Materiality is an entity-specific aspect of relevance. Information is material if omitting, misstating or obscuring it could influence the decisions of primary users based on the financial statements.

Faithful representation
-Complete
-Neutral
-Free from error

Question 3

Enhancing characteristics

Answer 3

Comparability
Verifiability
Timeliness
Understandability

Question 4

Asset

Answer 4

Present economic resource
Controlled by the entity as a result of past events
A right that has the potential to produce economic benefit

Question 5

Liability

Answer 5

Present obligation
transfer of economic resources
result of past events

Question 6

Equity

Answer 6

Residual interest in the assets
after deducting all its liabilities

Question 7

Income

Answer 7

Increases in assets
decreases in liabilities
result in change of equity
other than those relating to contributions from holders of equity claims

Question 8

Expenses

Answer 8

Decreases in assets
Increases in liabilities
result in decrease in equity
other than those relating to distributions to holders of equity claims

Question 9

Regulatory framework

IFRS Foundation

Answer 9

Appoints members to the board, IFRS Interpretations Committee and the IFRS Advisory Council
Reviewing general strategy of the board and monitoring its effectiveness
Approving the annual budget and determining the funding of the board

Question 10

Regulatory framework

IASB

Answer 10

International accounting standards board

responsible for development and publication of international financial reporting standards and conceptual framework

Question 11

Regulatory framework

IFRS Interpretations Committee

Answer 11

Provides timely guidance on the application and interpretation of IFRSs and, in context of the conceptual framework, guidance of new financial reporting issues not specifically addressed by IFRS

Question 12

Regulatory framework

ISSB - International sustainability standards board

Answer 12

comprehensive global baseline of sustainability-related disclosure standards