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Problem 2

The document consists of multiple-choice questions related to the Conceptual Framework for Financial Reporting and its authoritative status, purposes, and benefits. It covers topics such as the objectives of financial reporting, users of financial information, and the structure of the Revised Conceptual Framework. The questions aim to assess understanding of key concepts and the application of the framework in financial reporting.

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33 views

Problem 2

The document consists of multiple-choice questions related to the Conceptual Framework for Financial Reporting and its authoritative status, purposes, and benefits. It covers topics such as the objectives of financial reporting, users of financial information, and the structure of the Revised Conceptual Framework. The questions aim to assess understanding of key concepts and the application of the framework in financial reporting.

Uploaded by

eina4673
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Problem 2-1 Multiple choice (IFRS)

1. Which statement is true about the Conceptual Framework for Financial Reporting?
a. The Conceptual Framework is not a Standard.
b. The Conceptual Framework describes the concepts for general-purpose financial reporting.
c. In case of conflict, the requirements of the IFRS prevail over the Conceptual Framework.
d. All of these statements are true about the Conceptual Framework.

2. Which is not a purpose of the Revised Conceptual Framework?


a. To assist the IASB to develop IFRS based on consistent concepts.
b. To assist preparers to develop consistent accounting policy when no Standard applies to a particular transaction or when Standard
allows a choice of accounting policy.
c. To assist all parties to understand and interpret the Standards.
d. To assist regulatory agencies in issuing rules and regulations for a particular industry.

3. The scope of the Revised Conceptual Framework comprises how many chapters?
a. Five
b. Six
c. Seven
d. Eight

4. The Conceptual Framework provides the foundation for Standards that:


a. Contribute to transparency by enhancing international comparability and quality of financial information
b. Strengthen accountability of management.
c. Contribute to economic efficiency by helping investors to identify opportunities and risks.
d. All of these are the result of Standards developed based on consistent concepts.

Problem 2-2 Multiple choice (IFRS)

1. What is the authoritative status of the Conceptual Framework?


a. The Conceptual Framework has the highest level of authority.
b. In the absence of a standard or an interpretation that specifically applies to a transaction, the Conceptual Framework shall be
followed.
c. In the absence of a standard or an interpretation that specifically applies to a transaction, management shall consider the
applicability of the Conceptual Framework in developing and applying an accounting policy that results in information that is relevant
and faithfully represented.
d. The Conceptual Framework applies only when the LASB develops new standards.

2. The Conceptual Framework is intended to establish


a. GAAP in financial reporting.
b. The meaning of present fairly in accordance with GAAP
c. The objectives and concepts for use in developing standards of financial accounting and reporting.
d. The hierarchy of sources of GAAP.

3. A Conceptual Framework should


a. Lead to uniformity of financial statements.
b. Eliminate alternative accounting principles.
c. Guide multinational entities in developing generally accepted auditing standards.
d. Define the basic objectives, terms and concepts of accounting.

4. Which is not a purpose of the Conceptual Framework?


a. To provide definitions of key terms and fundamental concepts.
b. To provide specific guidelines for resolving situations not covered by existing accounting standards.
c. To assist accountants in selecting among alternative accounting and reporting methods.
d. To assist the International Accounting Standards Board in the standard-setting process.

Problem 2-3 Multiple choice (IAA)

1. In the Conceptual Framework for Financial Reporting, what provides the "why" of accounting?
a. Measurement and recognition concept
b. Qualitative characteristic of accounting information c. Element of financial statement
d. Objective of financial reporting

2. The underlying theme of the Conceptual Framework is


a. Decision usefulness
b. Understandability
c. Timeliness
d. Comparability

3. The objective of financial reporting


a. Is the foundation for the Conceptual Framework
b. Includes the qualitative characteristics of useful information
c. Is not found in the Conceptual Framework
d. All of these are correct choices regarding the objective of financial reporting

4. Which of the following is not a benefit associated with the Conceptual Framework?
a. A Conceptual Framework should increase users' understanding and confidence in financial reporting.
b. Pratical problems should be more quickly solvable.
c. A coherent set of accounting standards should result.
d. Business entities will need far less assistance from. accountants.

5. Which statement is not true concerning the Conceptual Framework?


a. The Conceptual Framework should be a basis for standard setting.
b. The Conceptual Framework should allow practical problems to be solved more quickly.
c. The Conceptual Framework should be based on fundamental truth derived from the law of nature. d. The Conceptual Framework
should increase users' understanding and confidence in financial reporting.

Problem 2-4 Multiple choice (AC)


1. Users of financial reports include which of the following?
a. Creditors
b. Creditors and government agencies
c. Creditors and unions
d. Creditors, government agencies and unions
2. The primary users of financial information include
a. Existing and potential investors
b. Existing and potential lenders and other creditors c. User group such as employees, customers, governments and their agencies,
and the public
d. Existing and potential investors, lenders and other creditors
3. Which group is not among the external users for whom financial statements are prepared?
a. Customers
b. Suppliers
c. Employees
d. All of these are external users of financial statements
4. Which of the following is an internal user of financial information?
a. Board of Directors
b. Shareholder
c. Holder of bonds
d. Creditor with long-term contract
5. These users require information on risk and return provided by their investment.
a. Investors
b. Employees
c. Lenders
d. Customers
6. These users are interested in information about the profitability and stability of the entity in order to assess the ability of entity to
provide remuneration, retirement benefits and employment opportunities.
a. Customers
b. The public
c. Governments and their agencies d. Employees
7. These users are interested in information that enables them to assess whether their loans, the related interest thereon, and other
amounts owing to them will be paid when due.
a. Lenders and other creditors
b. Borrowers
c. Trade creditors
d. Owners
8. These users are interested in information about the continuance of an entity, especially when they have a long-term involvement
with or are dependent on the entity.
a. Customers b. Employees c. Trade unions
d. Suppliers
9. These users are interested in information in order to regulate the activities of an entity, determine taxation policies and provide a
basis for national statistics.
a. Governments and their agencies b. Major organization of users c. Bureau of Internal Revenue d. Department of Finance
10. These users need information on trends and recent developments where an entity makes a substantial contribution to the local
economy providing employment and using local suppliers.
a. The public
b. Governments and their agencies
c. Finance entities
d. Private entities

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