The frameworks

Question 1

What is the purpose of the IASB conceptual framework?

Answer 1

To provide a basis for the consistent development of accounting standards.

Question 2

What are the two main qualitative characteristics of financial information according to the IASB conceptual framework?

Answer 2

Relevance and faithful representation.

Question 3

True or False: The IASB conceptual framework is a legally binding document.

Answer 3

False

Question 4

What is the objective of financial reporting according to the IASB conceptual framework?

Answer 4

To provide information about the entity’s financial performance and position.

Question 5

What are the four enhancing qualitative characteristics of financial information according to the IASB conceptual framework?

Answer 5

Comparability, verifiability, timeliness, and understandability.

Question 6

Fill in the blank: The IASB conceptual framework assists in the preparation and presentation of ________.

Answer 6

Financial statements.

Question 7

What is the definition of ‘relevance’ in the context of the IASB conceptual framework?

Answer 7

Information is relevant if it influences the economic decisions of users.

Question 8

What is the definition of ‘faithful representation’ in the context of the IASB conceptual framework?

Answer 8

Information faithfully represents the economic phenomena it purports to represent.

Question 9

True or False: The IASB conceptual framework applies only to publicly traded companies.

Answer 9

False

Question 10

What is the role of the IASB conceptual framework in resolving accounting disputes?

Answer 10

It provides a basis for resolving accounting disputes by referencing the underlying concepts.

Question 11

What is the definition of ‘comparability’ in the context of the IASB conceptual framework?

Answer 11

Information can be compared with similar information about other entities or within the same entity over time.

Question 12

What is the definition of ‘verifiability’ in the context of the IASB conceptual framework?

Answer 12

Different knowledgeable and independent observers could reach a consensus that the information is a faithful representation.

Question 13

Fill in the blank: The IASB conceptual framework assists in the formulation of ________.

Answer 13

Accounting standards.

Question 14

What is the definition of ‘timeliness’ in the context of the IASB conceptual framework?

Answer 14

Information is available to users in time to influence their decisions.

Question 15

What is the definition of ‘understandability’ in the context of the IASB conceptual framework?

Answer 15

Information is presented clearly and concisely so that users can understand it.

Question 16

What is the definition of ‘materiality’ in the context of the IASB conceptual framework?

Answer 16

Information is material if omitting it or misstating it could influence the economic decisions of users.

Question 17

True or False: The IASB conceptual framework prescribes specific accounting treatments for every situation.

Answer 17

False

Question 18

What is the definition of ‘neutrality’ in the context of the IASB conceptual framework?

Answer 18

Information is neutral if it is free from bias.

Question 19

What is the definition of ‘prudence’ in the context of the IASB conceptual framework?

Answer 19

The exercise of caution in the face of uncertainty.

Question 20

True or False: The IASB conceptual framework is static and does not evolve over time.

Answer 20

False

Question 21

What is the definition of ‘substance over form’ in the context of the IASB conceptual framework?

Answer 21

The economic substance of transactions should be considered over their legal form.

Question 22

What is the definition of ‘going concern’ in the context of the IASB conceptual framework?

Answer 22

The assumption that the entity will continue to operate for the foreseeable future.

Question 23

True or False: The IASB conceptual framework is applicable to all types of entities, regardless of their size or industry.

Answer 23

True

Question 24

What is the definition of ‘entity’ in the context of the IASB conceptual framework?

Answer 24

An economic unit that can be identified and distinguished from other entities.