Conceptual Framework

Question 1

Why do we need the Conceptual Framework?

Answer 1

To assist all parties to understand and interpret standards and FR

Question 2

Purpose of the Conceptual Framework

Answer 2

Assist develop IFRS Standards based on consistent concepts, assist preparers to develop consistent accounting policies when no standard applies to a particular transaction, assistance in understanding and interpreting the standards

Question 3

Is the conceptual framework a standard?

Answer 3

No

Question 4

Can there be conflicts between the framework and standards?

Answer 4

It evolves depending on different economic situations, if there is a conflict, follow the standard

Question 5

Levels of the Conceptual Framework

Answer 5

1. Goals and purposes
2. Qualitative characteristics of accounting information, and elements of financial statements
3. Principles used in establishing and applying accounting standards

Question 6

Objective of FR

Answer 6

Provide useful information in making resource allocation decisions, including the assessment of management stewardship

Question 7

What is Management Stewardship

Answer 7

How well management is using their entity resources to create and sustain value

Question 8

Are financial reports designed to provide the value of reporting entity?

Answer 8

No, they only give information on how to evaluate a company

Question 9

Do Financial reports provide all information that stakeholders need?

Answer 9

No, different stakeholders have different needs (we cant satisfy all of them)

Question 10

What are the two Qualitative Characteristics

Answer 10

Fundamental and Enhancing

Question 11

What are the Fundamental Qualitative Characteristics?

Answer 11

Relevance and Representational Faithfulness

Question 12

Define relevance, what are the ingredients for relevant information?

Answer 12

Information capable of making a difference in a decision context. Predictive and confirmatory

Question 13

Define Representational Faithfulness.

Answer 13

They are transparent (representing economic reality), with completeness, neutrality, prudence, and free from error

Question 14

What are the enhancing qualitative characteristics?

Answer 14

Comparability, Verifiability, Timeliness, Understandability

Question 15

What is materiality? (fundamental qualitative characteristics)

Answer 15

Is the information important enough to influence/change the judgement of a reasonable person? (materiality cannot be determined)

Question 16

Can we have all the qualitative characteristics?

Answer 16

No, trade-offs happen when one qualitative characteristic is sacrificed for another. The benefit should also outweigh the costs of providing the information

Question 17

What are the Principal Qualitative Characteristics of ASPE?

Answer 17

Understandability, Relevance (predictive and feedback value and timeliness), Reliability representational faithfulness, verifiability, neutrality, and conservatism), and Comparability

Question 18

Elements of Financial Statements

Answer 18

Assets, Liabilities, Equity

Question 19

Define Assets

Answer 19

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

Question 20

Define Liability

Answer 20

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

Question 21

Define Equity

Answer 21

The residual interest in assets after all liabilities are deducted

Question 22

Performance measures in Financial Reports

Answer 22

Income (revenues and gains), Expenses (expenses and losses)

Question 23

What is the implementation of Foundational principles

Answer 23

Which when and how financial elements and events should be recognized or derecognized, measured, and presented or disclosed

Question 24

Explain the concept of recognition

Answer 24

Meets the definition of an element, relevant and faithfully represented

Question 25

Explain the concept of Derecognition

Answer 25

Normally occurs for an asset when the entity loses control of all or part of the recognized asset and liability when there is no more present obligation for all or a part of the recognized liability

Question 26

Revenue Recognition Principle for ASPE

Answer 26

Earnings process is substantially complete
Measurability is certain
Collectability is reasonably assured

Question 27

Revenue recognition for IFRS

Answer 27

Asset and Liability View “recognition through the recognition of changes in assets and liabilities”

Question 28

All elements must be _____ to be recognized

Answer 28

measurable

Question 29

Kinds of measurement basis

Answer 29

Historical cost and current value

Question 30

Reporting Period (time period)

Answer 30

Economic activity of an entity may be artificially divided into time periods for reporting purposes

Question 31

Going Concern Assumption

Answer 31

A business enterprise will continue to operate in the forseeable future (otherwise use liquidation accounting)

Question 32

Monetary unit assumption

Answer 32

idk look it up

Question 33

Presentation and disclosure communication tools

Answer 33

focus on presentation and disclosure objectives and principles, classify similar and dissimilar items, only give necessary information

Question 34

Full disclosure principle

Answer 34

Anything relevant (sufficient detail and sufficiently condensed) Discloses may be made within the main body of the financial statements, as notes to the financial statements, as supplementary information (MD&A)