Started on Monday, 24 February 2020, 8:19 PM

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Completed on Monday, 24 February 2020, 8:24 PM
Time taken 5 mins 9 secs
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Question 1
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The IASB Conceptual Framework for Financial Reporting (as released in 2010),
requires that general purpose financial reports disclose information that is

Select one:
a. relevant to the assessment of performance, financial position and cash flows. 
b. relevant to the assessment of profit, funding and investing, and compliance
c. relevant to the assessment of financial and social performance, financial position
and funding and investing, and includes information about compliance

d. relevant to the assessment of performance, financial position and funding and

investing, including information about compliance

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The correct answer is: relevant to the assessment of performance, financial position
and cash flows.

Question 2
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A central goal in establishing a conceptual framework of accounting will be to obtain
general consensus on

Select one:
a. the scope and objectives of financial reporting and the qualitative characteristics
that financial information should possess 
b. the qualitative characteristics that financial information should possess.
c.  the scope and objectives of financial reporting.

d. what the elements of financial reporting are, including agreement on the

characteristics and recognition criteria for assets, liabilities, income, expenses and
equity.

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The correct answer is: the scope and objectives of financial reporting and the
qualitative characteristics that financial information should possess

Question 3
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The framework outlines two underlying assumptions of financial statements. These

are

Select one:
a. accrual basis of accounting and going concern assumption 
b. fair value basis and insolvency assumption
c. historical cost accounting and limited life concept.
 

d. cash basis of accounting and insolvency assumption

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The correct answer is: accrual basis of accounting and going concern assumption

Question 4
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When preparing financial reports, 'users are assumed to have a reasonable

knowledge of the business and economic activities and accounting and a willingness
to study the information with reasonable diligence'. This statement is consistent
with the qualitative characteristic of:

Select one:
a.  comparability
b. faithful representation.
c. materiality

d.  understandability 

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The correct answer is:  understandability

Question 5
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The accountant of Broken Bay Ltd decided to retain the historical cost of the entity's
intangible assets because it was difficult to obtain fair value of these assets. This
action is consistent with ____________.
 

Select one:
a. accrual accounting
b. cash accounting
c. balancing of relevance and faithful representation 

d. substance over form

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The correct answer is: balancing of relevance and faithful representation

Question 6
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Which of the following statement(s) is/are true of general purpose financial reports?

Select one:
a. General purpose financial reports should be prepared by all reporting entities and
general purpose financial reports are reports that comply with statements of
accounting concepts and accounting standards 
b. General purpose financial reports are reports that comply with statements of
accounting concepts and accounting standards
c. General purpose financial reports should be prepared by all reporting entities

d. General purpose financial reports are intended to meet the information needs
common to users who are able to command the preparation of reports

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The correct answer is: General purpose financial reports should be prepared by all
reporting entities and general purpose financial reports are reports that comply with
statements of accounting concepts and accounting standards

Question 7
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The IASB conceptual framework adopts which approach to determining profits

Select one:
a. Matching principle approach
b. Revenue/expense approach
c. Cash basis approach

d. Asset/liability approach 

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The correct answer is: Asset/liability approach

Question 8
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Identify the appropriate qualitative characteristic employed in the following

information

Select one:
a. faithful representation, relevance, consistency
b. relevance, faithful representation, comparability 
c. faithful representation, relevance, comparability

d. relevance, faithful representation, consistency

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The correct answer is: relevance, faithful representation, comparability

Question 9
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Which of the following actions best describes the qualitative characteristic

'relevance'?

Select one:
a. The financial report of KMC Ltd was audited by one of the Big Four accounting
firms
b. MCB Ltd and DGC Ltd both use accelerated depreciation method
c. DGC omitted a sales transaction equal to 10.5% of its accounts receivable 

d. GEP Ltd did not revalue its intangible assets because it was difficult to obtain the
fair value of the assets

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The correct answer is: DGC omitted a sales transaction equal to 10.5% of its
accounts receivable

Question 10
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Which of the following actions are consistent with the Doctrine of Conservatism?

Select one:
a. Excessive provisions for warranty expenses
b. Adoption of accelerated depreciation method to reduce profits
c. Deliberate overstatement of expenses to reduce profits

d. Careful assessment of doubtful debts 

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The correct answer is: Careful assessment of doubtful debts