The frameworks Flashcards
What is the purpose of the IASB conceptual framework?
To provide a basis for the consistent development of accounting standards.
What are the two main qualitative characteristics of financial information according to the IASB conceptual framework?
Relevance and faithful representation.
True or False: The IASB conceptual framework is a legally binding document.
False
What is the objective of financial reporting according to the IASB conceptual framework?
To provide information about the entity’s financial performance and position.
What are the four enhancing qualitative characteristics of financial information according to the IASB conceptual framework?
Comparability, verifiability, timeliness, and understandability.
Fill in the blank: The IASB conceptual framework assists in the preparation and presentation of ________.
Financial statements.
What is the definition of ‘relevance’ in the context of the IASB conceptual framework?
Information is relevant if it influences the economic decisions of users.
What is the definition of ‘faithful representation’ in the context of the IASB conceptual framework?
Information faithfully represents the economic phenomena it purports to represent.
True or False: The IASB conceptual framework applies only to publicly traded companies.
False
What is the role of the IASB conceptual framework in resolving accounting disputes?
It provides a basis for resolving accounting disputes by referencing the underlying concepts.
What is the definition of ‘comparability’ in the context of the IASB conceptual framework?
Information can be compared with similar information about other entities or within the same entity over time.
What is the definition of ‘verifiability’ in the context of the IASB conceptual framework?
Different knowledgeable and independent observers could reach a consensus that the information is a faithful representation.
Fill in the blank: The IASB conceptual framework assists in the formulation of ________.
Accounting standards.
What is the definition of ‘timeliness’ in the context of the IASB conceptual framework?
Information is available to users in time to influence their decisions.
What is the definition of ‘understandability’ in the context of the IASB conceptual framework?
Information is presented clearly and concisely so that users can understand it.
What is the definition of ‘materiality’ in the context of the IASB conceptual framework?
Information is material if omitting it or misstating it could influence the economic decisions of users.
True or False: The IASB conceptual framework prescribes specific accounting treatments for every situation.
False
What is the definition of ‘neutrality’ in the context of the IASB conceptual framework?
Information is neutral if it is free from bias.
What is the definition of ‘prudence’ in the context of the IASB conceptual framework?
The exercise of caution in the face of uncertainty.
True or False: The IASB conceptual framework is static and does not evolve over time.
False
What is the definition of ‘substance over form’ in the context of the IASB conceptual framework?
The economic substance of transactions should be considered over their legal form.
What is the definition of ‘going concern’ in the context of the IASB conceptual framework?
The assumption that the entity will continue to operate for the foreseeable future.
True or False: The IASB conceptual framework is applicable to all types of entities, regardless of their size or industry.
True
What is the definition of ‘entity’ in the context of the IASB conceptual framework?
An economic unit that can be identified and distinguished from other entities.
