Lesson2- Conceptual Framework

Question 1

Describe the process of setting standards

Answer 1

1. International financial reporting standards is a term that includes both the standards and their interpretations
2. Standards is the idea of a single global accounting language
3. These IFRSs are developed with reference to the conceptual framework for financial reporting
4. First various boards and committees consult the national standard setters of all the participating countries to ensure that all their ideas have been considered
5. Before the standard is issued, an exposure draft is issued to get feedback on any problem identified in the draft
6. After considering all the feedback received, the standards is then issued

Question 2

Who develops the exposure drafts

Answer 2

At least 9 of the 14 members of the IASB( International accounting standards board)

Question 3

Who develops interpretations

Answer 3

Previously the SIC (standing interpretation committee)
Now IASB called IFRSIC (international financial reporting standards interpretations committee)

Question 4

Who are users of financial statements

Answer 4

Investors, employees, lenders, public, government agencies, suppliers and other trade creditors and customers

Question 5

Explain the objective of making financial statements

Answer 5

To provide information about the reporting entity that is useful to existing and potential investors, lenders and other creditors in making decisions about providing resources to the entity

Question 6

What is accruel basis

Answer 6

Transactions are recorded for accounting purposes when they occur and not necessarily when can is revived or paid

Question 7

Name the 2 fundamental qualitative characteristics

Answer 7

1. Relevance (which involves materiality)
2. Faithful representation

Question 8

Name the 4 enhancing qualitative characteristics

Answer 8

1. Comparability
   2) verifiability
2. Timeliness
3. Understandability

Question 9

What do assets, liabilities and equity do?

Answer 9

Related to the statement of financial position

Question 10

What do income and expenses do?

Answer 10

Relates to the statement of comprehensive income