CP-01 (Reporting Framework & Ethics)

Question 1

Bribery (ঘুষ) Act 2010

Answer 1

Bribery (ঘুষ) is the corrupt solicitation, payment, or acceptance of a private favor (a bribe) in exchange for official action. The purpose of a bribe is to influence the actions of the recipient, a person charge of an official duty, to act contrary to their duty and the known rules of honesty and integrity.

Question 2

Accrual basis of accounting

Answer 2

Under this basis of accounting, transactions are recognized when they occur, not when cash is received or paid.

Question 3

Going concern basis accounting

Answer 3

The accrual basis of accounting assumes that an entity is a going concern. Under this basis, financial statements are prepared on the assumption that the entity will continue in operation for the foreseeable future.
Going concern is referred to by the Conceptual Framework as an underlying assumption.

Question 4

Cash basis accounting

Answer 4

Cash basis accounting is a method where income is recognized when cash is received, and expenses are recorded when they are paid in cash.

Question 5

Break-up basis

Answer 5

The break-up basis of accounting, also known as liquidation or non-going concern basis, is used when a company is no longer considered a going concern and its assets are being or will be sold off. It shifts from valuing assets based on their future use to their recoverable value in a forced sale or liquidation.

Question 6

What is Prudence? (বিচক্ষণতা)

Answer 6

It is the practice of ensuring that the company is not overvalued by preventing the income and assets from being overstated in the company’s reporting.

Question 7

What is Substance over form?

Answer 7

Transactions and events should be recorded according to their true economic reality, not merely their legal form.
In other words, if the legal structure of a transaction differs from its actual economic impact, accountants must reflect the economic substance — not just follow the legal documents.
Example:
Suppose a company sells an asset to a bank but agrees to buy it back later through a special arrangement. Legally, it looks like a sale.
But economically, the company still controls the asset and continues to use it — so in substance, it’s more like a loan secured by the asset, not an actual sale.
Thus, the company should account for it as a loan, not as a sale.

Question 8

What is Derecognition?

Answer 8

Derecognition is the removal of all or part of a recognised asset or liability
from an entity’s statement of financial position.
Derecognition normally occurs when the element no longer meets the definition of an element. For an asset, this is usually when control is lost. For a liability, this is usually when there is no longer a present obligation. It is possible to derecognise part of an asset or liability.