Conceptual Framework: the quiz

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Correct Answers : 8 Question
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Time Taken : 4 mins 14 secs
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Correct Points earned: 1 out of 1

Q1) If an IFRS Standard sets out requirements that are inconsistent with the
Conceptual Framework, preparers have to apply the Conceptual Framework for
affected transactions.
A. True
B. False (Your Answer)(Correct)
Explanation:See paragraph SP1.2

Correct Points earned: 1 out of 1

Q2) The objective of general purpose financial reporting as described in the

Conceptual Framework is to:
A. Provide information to regulators
B. Support the entity's tax return
C. Meet the information needs of an entity's stakeholders
D. Provide financial information about the reporting entity that is useful to existing and potential
investors, lenders and other creditors in making decisions relating to providing resources to the
entity (Your Answer)(Correct)
 Explanation:See paragraph 1.2

Correct Points earned: 1 out of 1

Q3) The Conceptual Framework describes prudence as:

A. The exercise of caution when making judgements under conditions of uncertainty (Your
Answer)(Correct)
B. A bias towards understating assets or income and towards overstating liabilities or expenses
C. A preference towards the earlier recognition of expenses and liabilities than of income and assets
D. A mechanism for smoothing profits over time (understate profits in good years and overstate
profits in bad years)
E. A form of accounting conservatism
Explanation:See paragraph 2.16

Correct Points earned: 1 out of 1

Q4) Consolidated financial statements provide information about the assets, liabilities,
equity, income and expenses of both the parent and its subsidiaries as:
A. Separate reporting entities
B. A partnership
C. A single reporting entity (Your Answer)(Correct)
D. A legal entity
Explanation:See paragraph 3.15

Correct Points earned: 1 out of 1

Q5) The residual interest in the assets of an entity after deducting all its liabilities is:
A. Income
B. Profit or loss
C. Equity (Your Answer)(Correct)
D. Other comprehensive income
Explanation:See paragraph 4.63

Correct Points earned: 1 out of 1

Q6) A high level of measurement uncertainty associated with an asset always results
 in the asset not being recognised.
A. True
B. False (Your Answer)(Correct)
Explanation:See paragraph 5.19

Correct Points earned: 1 out of 1

Q7) Which of the following factors is (or are) considered in selecting a measurement
basis?
A. Variability of cash flows of the asset or liability
B. How the asset or liability contributes to future cash flows, which depends in part on the nature of
an entity's business activities
C. The level of measurement uncertainty associated with a particular measurement basis
D. All of the above (Your Answer)(Correct)
E. None of the above
Explanation:See paragraph 6.50, 6.54, 6.60

Correct Points earned: 1 out of 1

Q8) In principle, all income and expenses are included in the statement of profit or
loss.
A. True (Your Answer)(Correct)
B. False
Explanation:See paragraph 7.17

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