Week 1 - conceptual framework

Question 1

Accounting provides information on

Answer 1

• accountability of a company
• efficiency of a company
• liquidity of a company

Question 2

Objective of financial reporting

Answer 2

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

Question 3

Financial information in financial reporting

Answer 3

General-purpose financial reports which provide information on the entity’s economic resources, claims, and changes in resources and claims

Question 4

Fundamental Qualitative characteristics in financial reporting

Answer 4

Relevance and Faithful Representation

Question 5

Enhancing Qualitative characteristics in financial reporting

Answer 5

Comparability, Verifiability, Timeliness, Understandability

Question 6

Constraints and Assumptions in financial reporting

Answer 6

Cost constraint, accrual accounting, going concern

Question 7

Relevance

Answer 7

reporting should have an impact on investment decisions

Question 8

faithful representation

Answer 8

rules should enable companies to fairly represent economic performance

Question 9

the matching concept

Answer 9

used to explain the relationship between expenses and revenues