,Questions
1 Type
,2
, MCQ bank – conceptual framework
1 How does the Conceptual Framework define an asset?
A A resource owned by an entity as a result of past events and from which future economic
benefits are expected to flow to the entity
B A resource over which an entity has legal rights as a result of past events and from which
economic benefits are expected to flow to the entity
C A resource controlled by an entity as a result of past events and from which future economic
benefits are expected to flow to the entity
D A resource to which an entity has a future commitment as a result of past events and from
which future economic benefits are expected to flow from the entity (2 marks)
2 Which one of the following would be classified as a liability?
A Dexter's business manufactures a product under licence. In 12 months' time the licence
expires and Dexter will have to pay $50,000 for it to be renewed.
B Reckless purchased an investment 9 months ago for $120,000. The market for these
investments has now fallen and Reckless's investment is valued at $90,000.
C Carter has estimated the tax charge on its profits for the year just ended as $165,000.
D Expansion is planning to invest in new machinery and has been quoted a price of $570,000. (2 marks)
3 Which one of the following would correctly describe the net realisable value of a two year old asset?
A The original cost of the asset less two years' depreciation
B The amount that could be obtained from selling the asset, less any costs of disposal
C The cost of an equivalent new asset less two years' depreciation
D The present value of the future cash flows obtainable from continuing to use the asset (2 marks)
4 The Conceptual Framework identifies an underlying assumption in preparing financial statements. This is:
A Going concern
B Materiality
C Substance over form
D Accruals (2 marks)
(Total = 8 marks)
CBE style OTQ bank – conceptual framework
5 The Conceptual Framework identifies four enhancing qualitative characteristics of financial
information. For which of these characteristics is disclosure of accounting policies particularly
important?
Verifiability
Timeliness
Comparability
Understandability (2 marks)
6 Which of the following is NOT a purpose of the IASB's Conceptual Framework?
To assist the IASB in the preparation and review of IFRS
To assist auditors in forming an opinion on whether financial statements comply with IFRS
To assist in determining the treatment of items not covered by an existing IFRS
To be authoritative where a specific IFRS conflicts with the Conceptual Framework (2 marks)
Questions 3
1 Type
,2
, MCQ bank – conceptual framework
1 How does the Conceptual Framework define an asset?
A A resource owned by an entity as a result of past events and from which future economic
benefits are expected to flow to the entity
B A resource over which an entity has legal rights as a result of past events and from which
economic benefits are expected to flow to the entity
C A resource controlled by an entity as a result of past events and from which future economic
benefits are expected to flow to the entity
D A resource to which an entity has a future commitment as a result of past events and from
which future economic benefits are expected to flow from the entity (2 marks)
2 Which one of the following would be classified as a liability?
A Dexter's business manufactures a product under licence. In 12 months' time the licence
expires and Dexter will have to pay $50,000 for it to be renewed.
B Reckless purchased an investment 9 months ago for $120,000. The market for these
investments has now fallen and Reckless's investment is valued at $90,000.
C Carter has estimated the tax charge on its profits for the year just ended as $165,000.
D Expansion is planning to invest in new machinery and has been quoted a price of $570,000. (2 marks)
3 Which one of the following would correctly describe the net realisable value of a two year old asset?
A The original cost of the asset less two years' depreciation
B The amount that could be obtained from selling the asset, less any costs of disposal
C The cost of an equivalent new asset less two years' depreciation
D The present value of the future cash flows obtainable from continuing to use the asset (2 marks)
4 The Conceptual Framework identifies an underlying assumption in preparing financial statements. This is:
A Going concern
B Materiality
C Substance over form
D Accruals (2 marks)
(Total = 8 marks)
CBE style OTQ bank – conceptual framework
5 The Conceptual Framework identifies four enhancing qualitative characteristics of financial
information. For which of these characteristics is disclosure of accounting policies particularly
important?
Verifiability
Timeliness
Comparability
Understandability (2 marks)
6 Which of the following is NOT a purpose of the IASB's Conceptual Framework?
To assist the IASB in the preparation and review of IFRS
To assist auditors in forming an opinion on whether financial statements comply with IFRS
To assist in determining the treatment of items not covered by an existing IFRS
To be authoritative where a specific IFRS conflicts with the Conceptual Framework (2 marks)
Questions 3
