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CFAS 2024 Chapter 7.PDF

Chapter 7 discusses the conceptual framework and accounting standards related to financial statements, focusing on the presentation and classification of financial information. It highlights the importance of effective communication and the distinction between profit or loss and other comprehensive income. Additionally, it explains the financial capital concept and its relation to net income and asset classifications.

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26 views

CFAS 2024 Chapter 7.PDF

Chapter 7 discusses the conceptual framework and accounting standards related to financial statements, focusing on the presentation and classification of financial information. It highlights the importance of effective communication and the distinction between profit or loss and other comprehensive income. Additionally, it explains the financial capital concept and its relation to net income and asset classifications.

Uploaded by

layyy008
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© © All Rights Reserved
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Download as PDF, TXT or read online on Scribd
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CONCEPTUAL FRAMEWORK AND ACCOUNTING STANDARD

Chapter 7

Problem 7-1 Conceptual Framework together with the statement showing other
comprehensive income?
The presentation and disclosure requirement
achieves all of the following, except ● b. Statement of comprehensive income
○ The term "statement of
● d. Financial position, financial comprehensive income" includes
performance, and cash flows both the income statement and other
○ The requirement focuses on effective comprehensive income.
communication, relevant and
faithfully represented information,
and understandability/comparability, Problem 7-2 Conceptual Framework
but not on presenting financial Financial capital is defined as
position, performance, and cash
flows specifically. ● a. Net assets in monetary terms
○ Financial capital focuses on net
It is the sorting of assets, liabilities, equity, income, assets measured in monetary terms.
and expenses with similar characteristics.
The physical capital maintenance concept requires
● a. Classification the
○ Classification involves sorting
financial items by their ● b. Current cost
characteristics. ○ Physical capital maintenance uses
current cost to ensure that physical
All of the following can be considered appropriate productive capacity is maintained.
classification, except
Which concept is applied to net income and other
● d. Offsetting asset and liability comprehensive income?
○ Assets and liabilities should not be
offset but should be presented ● a. Financial capital
separately unless offsetting is ○ Financial capital maintenance is used
required or permitted by accounting to assess net income and other
standards. comprehensive income.

Income and expenses are classified as The following statements relate to the term profit:

● a. Profit or loss and other comprehensive ● d. Only statements I and III are true
income ○ Profit is defined as the excess over
○ Income and expenses are presented the capital required to maintain the
in the profit or loss and other capital at the beginning of the period
comprehensive income categories. and is equivalent to net income under
IFRS. Statement II is not accurate as
What is the new term to describe the income it oversimplifies profit.
statement or statement of profit or loss

Reicelle Hannah A. Dusaran


This study source was downloaded by 739137 from cliffsnotes.com on 02-26-2025 06:52:59 GMT -06:00

https://www.cliffsnotes.com//study-notes/20504937
CONCEPTUAL FRAMEWORK AND ACCOUNTING STANDARD
Chapter 7

Under the financial capital concept, net income


occurs when

● c. The nominal amount of net assets at


year-end increased after excluding
distributions to and contributions from
owners
○ Financial capital maintenance
determines net income based on
changes in nominal net assets,
excluding owner transactions.

Reicelle Hannah A. Dusaran


This study source was downloaded by 739137 from cliffsnotes.com on 02-26-2025 06:52:59 GMT -06:00

https://www.cliffsnotes.com//study-notes/20504937
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