CONCEPTUAL FRAMEWORK- FUNDAMENTAL CHARACTERISTICS

Question 1

1.1RELEVANCE

Answer 1

CAPABLE OF MAKING A DIFFERENCE IN THE DECISIONS MADE BY USERS

Question 2

1.2MATERIALITY

Answer 2

INFORMATION IS MATERIAL IF OMITTED, MISTATED OR OBSCURED, COULD REASONABLY BE EXPECTED TO INFLUENCE DECISIONS OF THE PRIMARY USERS OF FINANCIAL STATEMENT.

Question 3

2.1 FAITHFUL REPRESENTATION

Answer 3

FINANCIAL STATEMENT ARE:
-COMPLETE
-NEUTRAL (FREE FROM BIAS)
-FREE FROM ERROR
-PRUDENT

Question 4

2.2 COMPLETE

Answer 4

INCLUDE ALL INFORMATION NECESSARY FOR USER TO UNDERSTAND PERFORMANCE AND FINANCIAL POSITION OF THE BUSINESS

Question 5

2.3 NEUTRAL

Answer 5

INFORMATION SHOULD NOT BE PRESENTED IN A WAY THAT WOULD INCREASE FAVOURABLY OR UNFAVOURABLY BY USERS

Question 6

2.4 PRUDENT

Answer 6

-ASSETS AND INCOME SHOULD NOT BE OVERSTATED
-LIABILITIES AND EXPENSES SHOULD NOT BE UNDERSTATED

Question 7

2.5 FREE OF ERROR

Answer 7

INFO/ AMOUNT DESCRIBED CLEARLY AND ACCURATELY