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Conceptual FW Testbank 2
Conceptual FW Testbank 2
Conceptual FW Testbank 2
Statement 1: Users of financial statements are assumed to have no knowledge of business and financial
accounting matters by financial statement preparers.
Statement 2: Relevance and reliability are the two main qualities that make accounting information useful for decision
making.
Statement 3: The idea of consistency does not mean that companies cannot switch from one accounting method
to another.
12. Primary responsibility for the preparation of financial statements in accordance with generally accepted
accounting principles
rests with
a. accountant. c. the external auditors.
b. management. d. the board of directors.
c. as a change in the value of the equity d. as a change in the purchasing power of the equity
14. Which of the following is true of the qualitative characteristics of ‘understandability’ in relation to information in
financial statements?
a. users should be willing to study the information with reasonable diligence
d. completeness of information.
2
Source: IFRS, 2018 Conceptual Framework & Various Testbanks
16. What are the measurement bases used in preparing the FS under “current value”?
17. Omission, misstatement or obscurement of information could reasonably be expected to influence the economic
decisions that primary users of general-purpose FS make on the basis of those statements which provide financial
information about a specific reporting entity. This concept describes___.
a. Faithful representation
c. Derecognition
b. Materiality
d. Accounting mismatch
18. Which of the following terms best describes assets that are recorded at an amount that represents the immediate
purchase cost of an equivalent asset?
a. historical cost
c. present value
b. realizable value
d. current cost
19. Consolidated financial statements provide information about the assets, liabilities, equity, income and expenses of
both the parent and its subsidiaries as:
a. Separate reporting entities
b. A partnership
d. A legal entity
20. Which factors may indicate that recognition of an item meeting the definition of an asset or a liability may not
provide relevant information?
c. Other factors
21. What does the Conceptual Framework say about profit or loss?
a. The statement of profit or loss is the only source of information about an entity’s financial performance for the
period
b. In principle, all income and expenses are included in the statement of profit or loss