Conceptual Framework - Conceptual Framework

Question 1

Articulation means that financial statements are:

Answer 1

Fundamentally interrelated in two ways:

1. Beginning Balance + Charges = Ending Balance
2. Assets = Liabilities + Equity

Question 2

FASB Primary Qualitative characteristics of accounting information

Answer 2

Reliability and Relevance

Question 3

Concepts Statements are intended to establish the:

Answer 3

Objectives and fundamental concepts that will be the basis for development of financial accounting and reporting guidance.

Question 4

Inter period Equity

Answer 4

Financial reporting should provide information to determine whether current year revenues were sufficient to pay for current year services.

Question 5

Budgetary and Fiscal Compliance

Answer 5

Financial reporting should demonstrate whether resources were obtained and used in accordance with the entity’s legally adopted budget; it should also demonstrate compliance with other finance-related legal or contractual requirements.

Question 6

Services Efforts Costs and Accomplishments

Answer 6

Financial reporting should provide information to assist users in assessing the service efforts, costs, and accomplishments of the governmental entity.

Question 7

The Primary characteristics of governmental structure are:

Answer 7

1. The representative form of gov’t and the separation of powers
2. The federal system of govt and the prevalence of intergovernmental revenues
3. The relationship of taxpayers to services received.

Question 8

Governmental Entities must issue two sets of Financial Statements?

Answer 8

The balance sheet or statement of net position and

The statement of revenue and expense or statement of activities.

Question 9

Qualitative characteristics of useful financial information, what are the US GAAP and IFRS differences?

Answer 9

IFRS and GAAP have the same qualitative characteristics for financial reporting purposes.

Question 10

Balance Sheet

Answer 10

Evaluation of a company’s liquidity would necessitate computation of liquidity, debt and equity ratios. The data used in computation of the ratios would be obtained from balance sheet.