Conceptual Framework

Question 1

Faithful representation characteristics

Answer 1

neutral, complete, free from material error

Question 2

Do interim financial reports focus on timeliness or faithful representation?

Answer 2

Timeliness

Question 3

Relevance characteristics

Answer 3

Predictive value, conformity value, materiality

Question 4

Primary Qualitative Characteristics

Answer 4

Relevance and Faithful representation

Question 5

Enhancing Qualitative Characteristics

Answer 5

Comparability, verifiability, timeliness, understandability

Question 6

Consolidated financial statements are prepared in recognition of: economic or legal entity concepts?

Answer 6

Economic entity concepts

Question 7

When a firm is liquidating, what method should be used to value assets.

Answer 7

Net realizable value. This replaces historical and replacement cost.

Question 8

Replacement Cost vs. Current Market Value

Answer 8

Replacement cost: amount to be paid for an item at a current time.
Current Market Value: price received to sell an asset in an ordinary transaction between market participants at measurement date

Question 9

Underlying concept for recording gain contingencies

Answer 9

Conservatism - which suppresses positive information when uncertain, and reports negative information when likely.