Question 1

The IASB Framework defines the objective of general purpose financial reporting as:

Accepted Answer

The IASB Framework defines the objective of general purpose financial reporting as providing information about the reporting entity that is useful to existing and potential investors, lenders, and other creditors in making decisions about providing resources to the entity. Option B is incorrect because monitoring the reporting entity's achievement of its objectives is not the objective of financial reporting. Option C is incorrect because "true and fair view" is not used in the current version of the IASB Framework. Option D is incorrect because there is a defined objective for general purpose financial reporting in the IASB Framework.

Question 2

Which components of the conceptual framework were withdrawn upon adoption of the IASB conceptual framework?

Accepted Answer

C

Question 3

From 1 January 2005 the Australian conceptual framework includes:

Accepted Answer

A

Question 4

Which of the following is not a fundamental issue when an accountant faces a new type of transaction?

Accepted Answer

The issuance of a transaction is not a fundamental issue that an accountant faces. However, recognition, measurement, and disclosure are fundamental issues, as they involve determining whether a transaction should be recorded, how it should be recorded, and how it should be disclosed in the financial statements.

Question 5

Describe the various factors in determining the existence of dependent users of financial statements.

Accepted Answer

The answer of Describe the various factors in determining the...

Question 6

Which factor(s)is/are identified in SAC1 to assist in determining whether an entity has users dependent on general purpose financial reports?

Accepted Answer

The separation of management and ownership is a key factor identified in SAC1 to assist in determining whether an entity has users dependent on general purpose financial reports, as it indicates a potential need for accountability and transparency through such reports.

Question 7

What is not a key characteristic concerning users of general purpose financial statements?

Accepted Answer

The statement "The users are internal to the entity" is not a key characteristic of users of general purpose financial statements. In fact, one of the key characteristics is that the users are external to the entity, meaning they are not part of the organization that is providing the financial statements. Options A and C are both correct key characteristics - the users do not necessarily have to be known to the entity, and they lack the power to demand specific information from the entity.

Question 8

In establishing reporting requirements,the Corporations Act distinguishes between:

Accepted Answer

The Corporations Act distinguishes between reporting requirements for large and small proprietary companies. Large proprietary companies have more stringent reporting requirements, including the need to prepare and lodge audited financial statements, while small proprietary companies may be exempt from certain reporting requirements. Therefore, option A is the correct answer. The other options do not accurately reflect the distinctions made by the Corporations Act.

Question 9

The major beneficiary from the development of a conceptual framework is expected to be:

Accepted Answer

Accounting standard setters are the major beneficiary from the development of a conceptual framework. The framework provides a cohesive and consistent set of concepts and objectives that guide the development of accounting standards. This, in turn, benefits preparers of financial reports and managers in providing a clear and reliable framework, but ultimately it is the standard setters who rely on the framework to create robust and effective accounting standards. Governments may also benefit indirectly through improved financial reporting and transparency.

Question 10

Which statement is incorrect?

Accepted Answer

The trend in accounting over many years has been to increase disclosure in published reports, not reduce it. This is because there is a growing demand for transparency and accountability in financial reporting.

Question 11

SAC1 defines an entity which has users who are dependent on general purpose financial reports as a/an:

Accepted Answer

SAC1 defines a reporting entity as an entity which has users who are dependent on general purpose financial reports. While accounting entity, company entity, and legal entity are all relevant terms in accounting, they do not specifically define an entity with users dependent on financial reports.

Question 12

Which of the following is not one of the major potential benefits of a conceptual framework for accounting standards setters?

Accepted Answer

While improving the communication process, creating more consistent and logical accounting standards, and improving accountability are all potential benefits of a conceptual framework for accounting standards setters, savings in auditing costs is not typically considered a major benefit.

Question 13

Assisting the users to assess the amount,timing and uncertainty associated with an entity's future
Cash flows is a decision common to:

Accepted Answer

Assessing the amount, timing, and uncertainty associated with an entity's future cash flows is a decision that is common in the for-profit sector, where financial decisions are made based on expected returns and profitability. Not-for-profit organizations and standards setters may have different priorities and may not be as focused on future cash flows. While auditors may assess the reasonableness of estimated cash flows, they are not primarily responsible for making decisions about them.

Question 14

Which term defines a 'financial report intended to meet the information needs common to users who are unable to command the preparation of reports tailored so as to satisfy,specifically,all of the information needs'.

Accepted Answer

General Purpose Financial Statements are designed to meet the information needs of common users who cannot demand tailor-made reports. These statements include the balance sheet, income statement, statement of cash flows, and statement of changes in equity.

Question 15

When deciding whether an entity is a reporting entity reference should be made to:

Accepted Answer

The answer of When deciding whether an entity is a...

Question 16

According to a study from the 1980's,what are the three components of the objective of accounting?

Accepted Answer

The answer of According to a study from the 1980's,what...

Question 17

Financial statements prepared by non-reporting entities are known as:

Accepted Answer

Financial statements prepared by non-reporting entities, such as private companies, can be classified as "special purpose financial statements" because they are prepared for a specific purpose, such as for internal use or to fulfill the requirements of certain regulatory bodies or lenders.

Question 18

List and briefly explain the four fundamental issues that accountants address when developing the appropriate accounting policy for a new type of transaction.

Accepted Answer

The answer of List and briefly explain the four fundamental...

Question 19

Distinguish between general purpose and special purpose financial statements.Give examples of each type of report.

Accepted Answer

The answer of Distinguish between general purpose and special purpose...

Question 20

The elements of financial statements,as outlined in the conceptual framework,are:

Accepted Answer

The elements of financial statements, as per the conceptual framework, include assets, liabilities, equity, income, and expenses. These elements help in understanding the financial position, performance, and changes in the financial position of an entity.

Quiz 2: The Conceptual Framework: Purpose, reporting Entity, the Objective of Financial Reporting, and Qualitative Characteristics