6 A conceptual and regulatory framework Flashcards Preview

F7 Financial Reporting > 6 A conceptual and regulatory framework > Flashcards

Flashcards in 6 A conceptual and regulatory framework Deck (19)
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1
Q

What is the international financial reporting standards foundation responsible for?

A

Governance of the IFRS standard setting process

2
Q

What is the international financial reporting standards board responsible for?

A

Responsible for setting IFRS standards

3
Q

What is the IFRS interpretations committee responsible for?

A

Issue guidance where divergent interpretations have arisen

4
Q

What does the IFRS advisory council do?

A

Forum for experts to offer advice to the board

5
Q

Why is a framework needed?

A

To ensure the achievement of relevant and reliable financial reporting
Full regulation of financial statements preparations

6
Q

What is principle based accounting?

A

Follows a conceptual framework

Accounting standards are created based on the conceptual framework

7
Q

What is rules-based accounting?

A

Accounting standards are a set of rules to be followed

‘Cookbook’ approach

8
Q

What is the standard setting process?

A

The board identifies a subject requiring a standard
The board establishes an advisory committee to recommend appropriate treatment
An exposure draft is issued
Having considered comments - publishes the standard

9
Q

What are qualitative characteristics?

A

Are attributes that make information useful

10
Q

What are the two types of qualitative characteristics?

A

Fundamental and enhancing

11
Q

What are the two types of fundamental characteristics?

A

Relevance and faithful representation

12
Q

What are the two types of relevance fundamental characteristics?

A

Predictive value

Confirmatory value

13
Q

What are the three types of faithful representation for fundamental characteristics?

A

Complete
Neutral
Free from error

14
Q

What are the four types of enhancing characteristics?

A

Comparability
Verifiability
Timeliness
Understandability

15
Q

What is the definition of an asset?

A

A resource controlled by an entity as a result of past events which is expected to result in an inflow or economic benefit

16
Q

What is the definition of a liability?

A

A present obligation as a result of past events which is expected to result in an outflow of economic benefit

17
Q

What is the definition of equity?

A

Residual interest in assets after deducing all liabilities

18
Q

What is the definition of income?

A

Increase in economic benefits in the form of inflows or enhancements of assets or decreases in liabilities

19
Q

What is the definition of an expense?

A

Decreases in economic benefits in the form of outflows or depletion’s of assets or incurrences of liabilities