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CHAPTER 1
The IASB and its Conceptual Framework
Learning Objectives
1.1 Describe the organisational structure of the key players in setting International Financial
Reporting Standards (IFRSs)
1.2 Describe the purpose of a conceptual framework – who uses it and why
1.3 Explain the qualitative characteristics that make information in financial statements
useful
1.4 Discuss the going concern assumption underlying the preparation of financial statements
1.5 Define the basic elements in financial statements – assets, liabilities, equity, income and
expenses
1.6 Explain the principles for recognising the elements of financial statements
1.7 Distinguish between alternative bases for measuring the elements of financial
statements
1.8 Outline concepts of capital.
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Multiple Choice Questions
1. Which of the following statements is INCORRECT?
Learning Objective 1.1 Describe the organisational structure of the key players in setting
IFRSs:
*a. The International Accounting Standards Board was replaced by the International
Standards Committee in 2001.
b. The International Accounting Standards Board is funded by the IASC
Foundation.
c. The responsibility for issuing International Financial Reporting Standards lies with
the International Accounting Standards Board.
d. Members of the International Accounting Standards Board are appointed by the
IFRS Foundation.
2. Which of the following bodies report to the IFRS Foundation?
Learning Objective 1.1 Describe the organisational structure of the key players in setting
IFRSs:
a. The IASB and AASB
b. The IASB, AASB and the IFRS Advisory Council
c. The IASB and the FASB
*d. The IASB and the IFRS Advisory Council
3. Which of the following statements is INCORRECT?
Learning Objective 1.2 Describe the purpose of a conceptual framework – who uses it
and why
a. The Framework identifies the qualitative characteristics that make information in
financial statements useful.
*b. The Framework defines principles for accounting recognition, measurement and
disclosure.
c. The Framework defines the objective of financial statements.
d. The Framework defines the basic elements of financial statements and the
concepts for recognizing and measuring them in financial statements.
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4. Which of the following statements is CORRECT?
Learning Objective 1.2 Describe the purpose of a conceptual framework – who uses it
and why
*a. IAS 8 Accounting Policies, Changes in Accounting Estimates, and Errors
requires that The Framework be followed in the absence of a specific standard or
interpretation.
b. IAS 8 Accounting Policies, Changes in Accounting Estimates, and Errors
recommends, but does not require The Framework to be followed in the absence
of a specific standard or interpretation.
c. The Framework is used solely by the IASB when considering new accounting
issues.
d. The Framework is non-binding guidance which does not have to be followed by
preparers of financial statements.
5. The Framework focuses on:
Learning Objective 1.2 Describe the purpose of a conceptual framework – who uses it
and why
a. privately owned business entities only.
*b. business entities only, including private and state owned business entities.
c. business entities, although the concepts may be applied to other types of entities,
such as not-for profit entities.
d. all types of entities, including business entities, government and not-for profit
entities.
6. General Purpose Financial Statements:
Learning Objective 1.2 Describe the purpose of a conceptual framework – who uses it
and why
a. are only necessary for users who do not have the power to obtain information in
addition to that contained within the General Purpose Financial Statement.
b. provide all the information that users may need to make economic decisions.
c. focus on disclosing information relevant to assessing the ability of an entity to
generate future cash flows.
*d. meet the information needs that are common to all users.
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CHAPTER 1
The IASB and its Conceptual Framework
Learning Objectives
1.1 Describe the organisational structure of the key players in setting International Financial
Reporting Standards (IFRSs)
1.2 Describe the purpose of a conceptual framework – who uses it and why
1.3 Explain the qualitative characteristics that make information in financial statements
useful
1.4 Discuss the going concern assumption underlying the preparation of financial statements
1.5 Define the basic elements in financial statements – assets, liabilities, equity, income and
expenses
1.6 Explain the principles for recognising the elements of financial statements
1.7 Distinguish between alternative bases for measuring the elements of financial
statements
1.8 Outline concepts of capital.
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,https://www.stuvia.com/user/gabrielucky https://www.stuvia.com/user/gabrielucky https://www.stuvia.com/user/gabrielucky
Multiple Choice Questions
1. Which of the following statements is INCORRECT?
Learning Objective 1.1 Describe the organisational structure of the key players in setting
IFRSs:
*a. The International Accounting Standards Board was replaced by the International
Standards Committee in 2001.
b. The International Accounting Standards Board is funded by the IASC
Foundation.
c. The responsibility for issuing International Financial Reporting Standards lies with
the International Accounting Standards Board.
d. Members of the International Accounting Standards Board are appointed by the
IFRS Foundation.
2. Which of the following bodies report to the IFRS Foundation?
Learning Objective 1.1 Describe the organisational structure of the key players in setting
IFRSs:
a. The IASB and AASB
b. The IASB, AASB and the IFRS Advisory Council
c. The IASB and the FASB
*d. The IASB and the IFRS Advisory Council
3. Which of the following statements is INCORRECT?
Learning Objective 1.2 Describe the purpose of a conceptual framework – who uses it
and why
a. The Framework identifies the qualitative characteristics that make information in
financial statements useful.
*b. The Framework defines principles for accounting recognition, measurement and
disclosure.
c. The Framework defines the objective of financial statements.
d. The Framework defines the basic elements of financial statements and the
concepts for recognizing and measuring them in financial statements.
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, https://www.stuvia.com/user/gabrielucky https://www.stuvia.com/user/gabrielucky https://www.stuvia.com/user/gabrielucky
4. Which of the following statements is CORRECT?
Learning Objective 1.2 Describe the purpose of a conceptual framework – who uses it
and why
*a. IAS 8 Accounting Policies, Changes in Accounting Estimates, and Errors
requires that The Framework be followed in the absence of a specific standard or
interpretation.
b. IAS 8 Accounting Policies, Changes in Accounting Estimates, and Errors
recommends, but does not require The Framework to be followed in the absence
of a specific standard or interpretation.
c. The Framework is used solely by the IASB when considering new accounting
issues.
d. The Framework is non-binding guidance which does not have to be followed by
preparers of financial statements.
5. The Framework focuses on:
Learning Objective 1.2 Describe the purpose of a conceptual framework – who uses it
and why
a. privately owned business entities only.
*b. business entities only, including private and state owned business entities.
c. business entities, although the concepts may be applied to other types of entities,
such as not-for profit entities.
d. all types of entities, including business entities, government and not-for profit
entities.
6. General Purpose Financial Statements:
Learning Objective 1.2 Describe the purpose of a conceptual framework – who uses it
and why
a. are only necessary for users who do not have the power to obtain information in
addition to that contained within the General Purpose Financial Statement.
b. provide all the information that users may need to make economic decisions.
c. focus on disclosing information relevant to assessing the ability of an entity to
generate future cash flows.
*d. meet the information needs that are common to all users.
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