CONCEPTUAL FRAMEWORK AND ACCOUNTING STANDARDS

REVIEWER FOR MT EXAM

I.MULTIPLE CHOICE

1.accounting income
2.taxable income
3.temporary differences
4.current tax - is the amount of income taxes payable (recoverable) in respect of the taxable profit (tax
loss) for a period.
5.Net worth
6.Current assets
7.Current liablities
8.Net income
9. EPS for separate F/S – presented by an entity in which the entity could elect, subject to the
requirements in this standard
10. EPS for consolidated F/S – financial statements of a group in which the assets, liabilities, equity,
income, expenses and cash flows of the parent and its subsidiaries are presented as those of a single
economic entity.
-when an entity presents consolidated financial statements prepared per PFRS 10 Consolidated
Financial Statements and PAS 27 Separate Financial Statements.
11. presentation of EPS
12. diluted EPS
13. EPS for continuing operations
14. EPS on discontinued operations
15. EPS on net income
16. EPS on net cash flows
17. Major F/S
18. employee benefits - all forms of consideration given by an entity in exchange for service
rendered by employees or for the termination of the employment
19. retirement benefits – sometimes referred to by various other names, such as ‘pension schemes’,
‘superannuation schemes’, or ‘retirement benefit schemes.
20. salaries and wages
21. paid leaves
22. current asset
23. non-current asset - long term, ppe, buildings
24. non-current liability - short term loan, payables
25. equity
26. Notes to the F/S
27. current service cost
28. past service
29. cost gain/loss on plan settlement
30. net interest
31. deferred tax asset - are the amounts of income taxes recoverable in future periods in respect of:
Temporary deductible differences; the carry forward of unused tax losses; and the carry forward of
unused tax credits.
32. current tax liability
33. current tax asset
 34. short-term lease
35. low-value lease
36. long-term lease
37. contingent asset - usually arise from unplanned or unexpected events that give rise to the
possibility of an inflow of economic benefits to the entity.
38. contingent liability - disclosed unless the possibility of an outflow of resources embodying
economic benefits is remote.
39. contingent share agreement
40. provision - a liability of uncertain timing or amount.
41. An entity is permitted to depart from a particular standard if …….
42. exit price - The price that would be received to sell an asset or paid to transfer a liability.
43. fair value
44. active market -
45. principal market
46. most advantageous market
47. inactive market
48. Input levels represented by quoted prices in active markets for identical assets/liabilities
49. income approach -income approach converts future amounts (e.g., cash flows or income and
expenses) to a single current (i.e., discounted) amount. When the income approach is used, the fair
Value measurement reflects current market expectations about those future amounts.
50. market approach - The market approach uses prices and other relevant information generated
by market transactions involving identical or comparable (i.e., similar) assets, liabilities, or a group of
assets and liabilities, such as a business.
51. cost approach - cost approach reflects the amount required to replace an asset’s service
capacity (often referred to as current replacement cost).
52. valuation approach
Review my handout on Financial Instruments

II. IDENTIFICATION/FILL IN THE BLANKS/TRUE OR FALSE

1. compound financial instrument

2. treasury shares
3. credit risk - is the risk that one party to a financial instrument will cause a financial loss for the other
party by failing to discharge an obligation.
4. liquidity risk - is the risk that an entity will encounter difficulty meeting obligations associated with
financial liabilities that are settled by delivering cash or another financial asset.
5. market risk - is the risk that the fair value of future cash flows of a financial instrument will fluctuate
because of changes in market prices.
6. interest rate risk - The risk that a financial instrument's fair value or future cash flows will fluctuate
because of changes in market interest rates.
7. defined benefit plan - post employment benefit plans other than defined contribution plan
8. defined contribution plan - post employment benefit plans under which an entity pays fixed
contributions into a separate entity or fund.
9. currency risk -The risk that a financial instrument's fair value or future cash flows will fluctuate
because of changes in foreign exchange rates.
10. finance lease
11. operating lease
12. sensitivity analysis
13. onerous contract - a contract in which the unavoidable costs of meeting the obligations under the
contract exceed the economic benefits expected to be received under it.
14. present value - Value in use is the present value of the cash flows or other economic benefits an
entity expects to derive from using an asset and its ultimate disposal.
15. restructuring - a program that is planned and controlled by management and materially changes
either: the scope of a business undertaken by an entity; or how that business is conducted.
16. tax base