Regulation of Accounting

Question 1

What are the five factors that have shaped the development of accounting?

Answer 1

legislation

accounting concepts and individual judgement

accounting standards and the conceptual framework

generally accepted accounting practise GAAP

true and fair view/fair presentation

Question 2

What does the conceptual framework set out?

Answer 2

sets out the concepts that underlie the preparation and presentation of financial statement

Question 3

When a new accounting standard is issued out, what is it based on?

Answer 3

the principles of the conceptual framework

Question 4

What is applied when there is no accounting standard?

Answer 4

the conceptual framework

Question 5

Is the conceptual framework an accounting standard?

Answer 5

no

Question 6

What are the objectives of financial reporting?

Answer 6

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

Question 7

What are the two fundamental characteristics of the conceptual framework?

Answer 7

relevance and faithful representation

Question 8

Conceptual Framework - Relevance

Answer 8

assist users in evaluating past and predicting future events

materiality

confirmatory and predictive value