a. Explain the purpose of the Framework b. Define assets and liabilities and explain the important aspects of their definitions. Explain why these definitions are of particular importance for the preparation of an entity's statement of financial position and income statement.
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- According to CF of IASB Determining how an asset or liability should be measured should ideally be linked to: Select one: a. All of above b. the perceived objectives of general purpose financial reporting c. to provide information beneficial to decisions involve buying, selling or holding equity and debt instruments, and providing or settling loans and other forms of credit. d. usefulness to existing and potential investors, lenders and other creditors in making decisions about providing resources to the entityFor each class of financial assets and liabilities, the entity shall disclose the fair value of that class of financial assets and liabilities in a manner that allows comparison with the corresponding carrying amount on the balance sheet. Why do you think that these disclosures contribute to improving the quality of information for users of financial statements? Comment criticallyDiscuss the significant of the following assumptions in the preparation of entity financial statement. Explain the importance. · Entity assumption · Accrual Basis assumption · Going concern assumption · Period assumption
- Match the element to the correct definition according to the International Accounting Standards Board's Conceptual Framework for Financial Reporting? Element Definition A resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity. Expense Liability The residual interest in the assets of the entity after deducting all its liabilities. A present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits. Asset Decrease in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrences of liabilities. EquityMateriality is an entity-specific aspect of which of the qualitative characteristics of financial information? Select one: a. Understandibility b. Timeliness C. Relevance d. VerifiabilityDiscuss the significance of the following assumptions in the preparation of an entity’s financial statements: Entity assumption Accrual basis assumption Going concern assumption Period assumption
- Discuss the significant of the following assumptions in the preparation of entity financial statement. Explain the importance with example · Entity assumption · Accrual Basis assumption · Going concern assumption · Period assumptionThe scope of conceptual framework for financial reporting concerned with Which of the following given options? a. Concepts of capital and capital maintenance and the qualitative characteristics of useful financial information b. The objective of general purpose of financial reporting and going concern assumption. c. All the given options d. Elements of financial statements, recognition and measurement of elements of financial statementsDepending on the business model for managing financial assets, an entity shall classify financial assets subsequent to initial recognition at
- Recognition is the process of: A. Capturing, for inclusion in the statement of financial position or the statement(s) of financial performance, an item that meets the definition of one of the elements of the financial statements—an asset, a liability, equity, income or expenses B. Determining where an item should be presented in the financial statements C. Sorting assets, liabilities, equity, income or expenses on the basis of shared characteristics D. Adding together of assets, liabilities, equity, income or expenses that have shared characteristicsThe primary objective of financial management Can be in the form of a. Maximise the entity’s asset b. Minimise an entity’s liabilities c. Achieve a balance between risk and return d. Achieve a balance between current assets and current liabilitiesAs part of the fundamental characteristic of relevance, an important component of relevance is materality. What does it mean when an item is "immaterial"? Is it usually reported in the financial statements/notes of the financial statements? Explain.