Sebastian Hartanto

21221882

2EB09

Akuntansi Keu. Menengah 1 A&B, Exercise 2 - Week 2

Questions

1. What is a conceptual framework? Why is a conceptual framework necessary in financial

accounting?

2. What is the primary objective of financial reporting?

3. What is meant by the term “qualitative characteristic of accounting information”?

4. Briefly describe the two fundamental qualities of useful accounting information

5. How is materiality (or immateriality) related to the proper presentation of financial statements?
What factors and measures should be considered in assessing the materiality of a misstatement in
the presentation of a financial statement?

6. What are the enhancing qualities of the qualitative characteristics? What is the role of enhancing
qualities in the conceptual framework?

Answers

1. In financial accounting, a conceptual framework is used to develop accounting standards and

provide procedures on how to find solutions to emerging accounting problems.

2. The most specific objective of external financial reporting is to provide information about the
enterprise's resources, claims to those resources, and how both the resources and claims to
resources change over time.

3. Qualitative characteristics of accounting information are traits that allow financial professionals to
more easily understand and make decisions on accounting reports.

4. Relevance and reliability are the two primary qualities that make accounting information useful for
decision making.

5. All the material items must be disclosed as per the financial reporting framework and guidelines
provided by the accounting standard board.

Based on the significance of a specific item, situation, period, size of misstatement, nature of
misstatement, etc., on the financial statement, the item is treated as material or immaterial, and
material items are disclosed. All materials items must be disclosed by way of note of amount or fact
since any changes will affect the decision and business of the users of financial statements.
6. Enhancing qualities are qualitative characteristics that are complementary to the fundamental
qualitative characteristics. These characteristics distinguish more-useful information from less-useful
information. Enhancing characteristics are comparability, verifiability, timeliness, and
understandability.