Conceptual Framework

Question 0

Opposite (US) of conceptual framework

Answer 0

Rules based

Question 1

2 needs for conceptual framework

Answer 1

1) development of new reporting practices

2) evaluate existing practices

Question 2

3 benefits of conceptual framework

Answer 2

1) standardised/consistent
2) less political pressure
3) avoids patchwork/reactive approach

Question 3

Drawback of conceptual framework

Answer 3

User needs not all considered

Question 4

4 needs for GAAP

Answer 4

1) national accounting standards
2) national company law
3) stock exchange requirements
4) regional bodies (EU)

Question 5

3 needs for IFRS’s

Answer 5

1) provide financial info
2) help existing/potential investors/creditors/lenders
3) make decisions (buy/sell/hold debt instruments)

Question 6

What is accrual accounting

Answer 6

Recognise in the period occurred, not the physical payment

Question 7

fundamental qualities of accounting

Answer 7

ReFaMat!

Relevance
Faithful representation
Materiality

Question 8

enhancing qualities of accounting

Answer 8

VerTiComUn!

Verifiability
Timeliness (within 14 days)
Comparability
Understandability

Question 9

Timeliness in providing financial reports is what parameter

Answer 9

Within 14 days

Question 10

What 4 aspects comprise faithful representation

Answer 10

ComFreeNeuSub!

Complete
Free from error
Neutral
Substance > form

Question 11

What is substance over form

Answer 11

Recognising the commercial aspect over the legal form

Question 12

What is going concern

Answer 12

Business expected to continue operating for the foreseeable future (1+ years)

Question 13

What is the opposite of going concern

Answer 13

Break-up

Question 14

What is an ASSET

Answer 14

Resource controlled by entity
Result of past events
Future economic benefits expected

Question 15

What is a LIABILITY

Answer 15

Present obligation
From past events
Outflow of economic resources

Question 16

What is EQUITY

Answer 16

Residual interest
After assets - liabilities
(Net assets = share capital + reserves)

Question 17

What is INCOME

Answer 17

Inflows/enhanced assets/decreased liabilities
Increase equity (except capital introduced)

Question 18

What are EXPENSES

Answer 18

Outflows/depletion of assets/increased liabilities
Decrease equity (except dividends)

Question 19

3 factors of A.L.I.C.E. recognition

Answer 19

1) meets definition
2) probable economic inflow/outflow
3) reliably measured

Question 20

What are reliable measures of A.L.I.C.E.?

Answer 20

1) historic cost
2) realisable value (selling price)
3) current cost (similar price in stores)
4) present value (discounted cash flows it would generate)

Question 21

What is the present value calculation

Answer 21

1 / (1+d.f.)*n

Question 22

How is a true and fair view achieved

Answer 22

1) comply with IFRS/IAS/IFRS.IC/GAAP
2) appropriate accounting policies
3) VerTiComUn
4) provide additional disclosures