The Qualitative Characteristics

Question 1

The main purpose of the Framework

Answer 1

1 assist in the development of future IFRS and the review of existing standards by setting out the underlying concepts
2 promote harmonisation of accounting regulation and standard by reducing the number of permitted alternative accounting treatments
3 assits the preparers of financial statements in the application of IFRS

Question 2

Qualitative characteristics necessary to provide useful financial info

Answer 2

• Fundamental characteristics: Relevance ( influence economics decisions, predictive value, materiality) and Faithful representation (complete, neutral and free from error)
• Enhancing characteristics: Comparability ( User can identify similarities, Consistent application of methods, verifiability, timeliness and understandability

Question 3

Which of the following concepts explain why an allowance for receivable is created?
A. Going concern
B. Prudence

Answer 3

B. Prudence

Question 4

Which of the following concepts best explains why depreciation is charged in the financial statement?
A. Relevance
B. Going concern
C. Accrual
D. Money measurement

Answer 4

C. Accruals concept

Question 5

The IASB Conceptual Framework for Financial Reporting identifies qualitative characteristics that make financial information faithfully represent what it purports to represent.
Which TWO of the following are examples of those qualitative characteristics?
A. Accruals
B. Completeness
C. Going concern
D. Neutrality

Answer 5

B. Completeness and D. Neutrality