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Conceptual Framework for Financial Reporting
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Conceptual Framework for Financial Reporting
Conceptual Framework for Financial Reporting
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1
Question
What is the Conceptual Framework for Financial Reporting?
Answer
A document describing the objective of, and the concepts for, general purpose financial reporting, promulgated by the IASB.
2
Question
Is the Conceptual Framework a complete, comprehensive, and single document?
Answer
Yes, it is.
3
Question
What is the Conceptual Framework a summary of?
Answer
The terms and concepts that underlie the preparation and presentation of financial statements for external users.
4
Question
When was the framework for the preparation and presentation of financial statements approved by the IASC Board?
Answer
April 1989
5
Question
When was the Framework initially published?
Answer
July 1989
6
Question
When was the Framework adopted by the IASB?
Answer
April 2001
7
Question
When was the Conceptual Framework for Financial Reporting 2010 approved by the IASB?
Answer
September 2010
8
Question
When was the Conceptual Framework for Financial Reporting 2018 published?
Answer
March 2018
9
Question
What is the current status of IFRS?
Answer
In use and expanding.
10
Question
Who issues IFRS standards?
Answer
IASB (International Accounting Standards Board)
11
Question
What is the current status of IAS?
Answer
Some still in use.
12
Question
Who issued IAS standards?
Answer
IASC (International Accounting Standards Committee)
13
Question
What is the current status of the Conceptual Framework?
Answer
Supports IFRS but is not a standard itself.
14
Question
Who issues the Conceptual Framework?
Answer
IASB (International Accounting Standards Board)
15
Question
What are the three foundations that the Conceptual Framework provides for Standards?
Answer
Contribute to Transparency, Strengthen Accountability, and Contribute to Economic Efficiency
16
Question
How does the Conceptual Framework contribute to transparency?
Answer
By enhancing international comparability and quality of financial information.
17
Question
How does the Conceptual Framework strengthen accountability?
Answer
By reducing information gap between the providers of capital and the people to whom they have entrusted their money.
18
Question
How does the Conceptual Framework contribute to economic efficiency?
Answer
By helping investors to identify opportunities and risks across the world.
19
Question
What are the purposes of the Conceptual Framework?
Answer
To assist the IASB in developing IFRS Standards, assist preparers of financial statements, and assist all parties to understand and interpret IFRS Standards.
20
Question
4 PURPOSES OF THE CONCEPTUAL FRAMEWORK
Answer
a. To assist the International Accounting Standards Board to develop IFRS Standards based on consistent concepts. b. To assist preparers of financial statements to develop consistent accounting policy when no Standard applies to a particular transaction or other event or where an issue is not yet addressed by an IFRS. c. To assist preparers of financial statements to develop accounting policy when a Standard allows a choice of an accounting policy. d. To assist all parties to understand and interpret the IFRS Standards.
21
Question
What should management consider when no standard or interpretation specifically applies to a transaction?
Answer
The applicability of the Conceptual Framework.
22
Question
Is the Conceptual Framework an International Financial Reporting Standard?
Answer
No, it is not.
23
Question
Does anything in the Conceptual Framework override any specific International Financial Reporting Standard?
Answer
No, it does not.
24
Question
If a standard specifically applies to a transaction, does the conceptual framework override that standard?
Answer
No, the standard overrides the Conceptual Framework.
25
Question
What is the objective of general purpose financial reporting?
Answer
To provide financial information about the reporting entity that is useful to existing and potential investors, lenders, and other creditors in making decisions relating to providing resources to the entity.
26
Question
What decisions do investors, lenders, and creditors make based on financial information?
Answer
Decisions about buying, selling, or holding equity and debt instruments; providing or settling loans and other forms of credit; and exercising rights to vote on or otherwise influence managements actions.
27
Question
What are the two classifications of users of financial information?
Answer
Primary users (existing and potential investors, lenders, and other creditors) and other users (employees, customers, governments, and the public).
28
Question
What information do users need to make assessments about an entity?
Answer
The economic resources of the entity, claims against the entity, and changes in those resources and claims; and how efficiently and effectively the entitys management and governing board have discharged their responsibilities.
29
Question
THE INFORMATION NEEDS OF ITS USERS
Answer
Existing and potential investors, lenders and other creditors need information to help them make those assessments. To make the assessments , existing and potential investors, lenders and other creditors need information about a) the economic resources of the entity, claims against the entity and changes in those resources and claims; and b) how efficiently and effectively the entity’s management and governing board have discharged their responsibilities to use the entity’s economic resources.
30
Question
What is accrual accounting?
Answer
Income is recognized when earned regardless of when received, and expense is recognized when incurred regardless of when paid.