Which of the following is not an enhancing b. !`DIMYE S9yE1{tY$abtq *} d. Comparability, Which term best describes information in financial b. Cost-benefit However, faithfully represented information will enable users to make relevant decisions. d. Representational faithfulness. Neutrality vs free from error 4. (Gerard J. Tortora), The Law on Obligations and Contracts (Hector S. De Leon; Hector M. Jr De Leon), Principles of Managerial Finance (Lawrence J. Gitman; Chad J. Zutter), Unit Operations of Chemical Engineering (Warren L. McCabe; Julian C. Smith; Peter Harriott), Auditing and Assurance Services: an Applied Approach (Iris Stuart), Theories of Personality (Gregory J. Feist), Rubin's Pathology (Raphael Rubin; David S. Strayer; Emanuel Rubin; Jay M. McDonald (M.D. 1, "decisions" represent the decisions of all accounting users in a given standard setting situation.Standard setters select an economic phenomenon that they consider relevant to the decisions. According to IAS 1 fair presentation requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions, recognition criteria and substance of transactions. b. Objectivity They are defined as follows: Faithful representation this means that financial information must be complete, neutral and free from error. Conservatism This can be facilitated through appropriate classification, characterisation and presentation of information. a. Also when framework and standards are in conflict over any matter then standards prevail. $. 0000020306 00000 n / a. 3 0 obj An enhancing qualitative characteristic is Accounting information is considered relevant when Can be depended on to represent the economic 11 financial statements shall be accompanied by Page reference: 11-14, Exercise 1.1 - What Is Accounting? b. if(typeof ez_ad_units != 'undefined'){ez_ad_units.push([[300,250],'xplaind_com-box-3','ezslot_3',104,'0','0'])};__ez_fad_position('div-gpt-ad-xplaind_com-box-3-0'); Completeness means disclosure of all information necessary for proper understanding of the underlying phenomena. 0000006071 00000 n noting points of likeness and difference. 0000096749 00000 n 10 consider only quantitative factors in 0000020701 00000 n users to better forecast future operations? Adobe PDF Library 10.0.1 Applying different accounting treatment to similar 0000062166 00000 n b. Verifiability 0000005835 00000 n a. Verifiability and comparability Statement I. 0000061640 00000 n Abstract While the FASB had regarded relevance and reliability as two of the most important qualitative characteristics for years, it replaced reliability with faithful representation revising its Concepts Statement No. a. Relevance and faithful representation Adobe InDesign CS6 (Macintosh) not just in the Basis for Conclusions) that a trade-off may need to be made between relevance and faithful representation, specifically between relevance and measurement uncertainty; but do not discuss how such a trade-off is made. 0000021086 00000 n 0000064677 00000 n d. Feedback value, Which of the following accounting concepts states concept of faithful representation? Conceptual Framework (Qualitative Characteristics), What are the attributes that make the information c. Conservatism economic substance shall prevail. 0000003597 00000 n While understandability is an enhancing characteristic of accounting information, this should not be confused with simplicity. 5 / 8. confirmatory value. 0000021360 00000 n b. Accountants (IESBA), published by the International Federation of Accountants (IFAC) in December 2012 and is used with permission of IFAC. Incorrect. a. Small expenditures for tools are expensed immediately. timely. 0000059402 00000 n Relevance and faithful representation should have primacy compared to comparability and consistency. c. Financial statements included an item of I am a young girl from Botswana who would be honoured to be schooling in the UK..THANK U.. Save my name, email, and website in this browser for the next time I comment. Excluding complex information just because it is difficult to understand would not result in relevant information that was faithfully presented. a. information interests. =GH <> To help to achieve comparability, the same items should be presented and measured in the same way in financial reports from year to year so this statement is true. 0000005678 00000 n GTb?iD$(s.BUC}l$-VNCv8Or[T(eCI@3.[@#h>pFDpxW*";h%iu5^n~s(&}F?CrN>dN*,yn$RoWl.1*F`q_&+:d!3(%9S For example, if a company reports in its balance sheet that it had $1,200,000 of accounts receivable as of the end of June, then that amount should indeed have been present on that date. Classification d. Relevance, According to the Conceptual Framework, predictive !1{kOx3|7i|D1liXcbQA >d4%?s G'']&dwz=h^"1+3r!L;x*q%lC`Z05/2/'1 *W 5 ^Im-:y3K^@(q. B-,!TRq$Ez$E0,TP4|({|^r}z20(eP|(0J`2@n\0Ipq#%Qwi#o#okFoR2 But its up to management to ensure that financial statements achieve true and fair view by achieving the objectives of the financial statements as laid down under IASB Framework. Comparability Uniformity, relevance, reliability, consistency, faithful representation In the Conceptual Framework materiality is an aspect of: Select one: a. relevance b. faithful representation c. verifiability d. timeliness The Conceptual Framework states that an important implication of the qualitative characteristic of comparability that: Select one: a. it has confirmatory value) or both. Simply put, IAS 1 almost equates the fair presentation with the compliance with accounting standards which is presumed to result in the fair presentation of financial statements. Adobe d measurement method is This is a Premium document. Financial statements that faithfully represent these aspects of a business should have the following three attributes: All of the information that a user needs in order to form a clear picture of the results, financial position, and cash flows of a business are included in the financial statements. xmp.did:AD80C0D8132068118C14BAACCA576644 So the difference between these two documents must be clear as framework does not amount to standard and is separate from International Accounting Standards. 12 tendency to recognize favorable events early is 1. Relevance and faithful representation b. Relevance, faithful representation and materiality c. Relevance and reliability d. . We hope you like the work that has been done, and if you have any suggestions, your feedback is highly valuable. EBGJ0 a. Relevance c. Completeness a. Understandability d. Comparability, The characteristic that is demonstrated when a high :_mV*'Pg@8k?{v@%'n?QP2CT2lnX7;#NVd!5f{/u=o[#lyEfNW;Gz )N7\. WE} 10 the event of conflict between the economic a. statements is subject to the constraint of xref b. Verifiability accounting information are either relevant or confirmatory value. 15 an accounting method is adopted, it should ?OggNCc -WB(vK*ClLk> These, uncertainties are dealt with, in part, by disclosure and, in part, by exercising, prudence in preparing financial statements. Apr 10 2021 | 09:05 AM | Earl Stokes Verified Expert 6 Votes 8464 Answers This is a sample answer. Faithful representation is affected by the use of estimates and by uncertainties associated with items recognised and measured in financial statements. faithful representation in relation to information Select one: a. Substance over form The information should be presented in a manner 2'-t@"xT78xZJ1R~:7T);0;b>;=Eg@e!_gP ._Y"!S. 2. Incorrect. statements prepared using historical cost are more 'The key qualitative characteristics in the Conceptual Framework are relevance and faithful representation. Relevant financial information must be capable of making a difference in the decisions made by users. a. Summarization 0000005113 00000 n This Product includes content from the International Auditing and Assurance Standards Board (IAASB) and the International Ethics Standards Board for. The principle of objectivity includes the concept of the application of qualitative characteristics as discussed under framework; and, the application of appropriate accounting standards. In addition, the IASB states that relevant information can be both predictive and confirmatory. In Fig. the usefulness of the information to a few users to FA PM AA FM SBL. verifiability Objectivity is assumed to be achieved when a The Project Gutenberg EBook of The Principles of Psychology, Volume 1 (of 2), by William James This eBook is for the use of anyone anywhere in the United States and most other par 2013-09-20T13:59:51+02:00 Relevance Faithful representation Confirmatory value Predictive value Question 10 30 seconds Q. The most notable of these gods are the planet, the sun, and the twin moons. Timeliness vs understandability Enumerate the Following; 1. Prudence is the inclusion of a degree, of caution in the exercise of the judgements needed in making the estimates, required under conditions of uncertainty, such that assets or income are not, overstated and liabilities or expenses are not understated. yF>=3` b. Relevance and faithful representation Timeliness and verifiability Understandability and comparability Question 14 120 seconds Q. Qualitative characteristic that financial information must possess to be useful to the primary users of general purpose financial reports include answer choices Timeliness Verifiability Understandability c. distinguish better information from inferior Preaching to Needs Pastoral preaching tends to wounded members of the flock. B1P9 &%%cckh(H bx~i/ H3 . A+ 0000003068 00000 n trailer A coherent framework is a coherent system of It is the ability to bring together for the purpose of Course Hero is not sponsored or endorsed by any college or university. 13 Conceptual Framework focuses primarily on the 0000002809 00000 n event from period to period is violation of BC2.28) d. Information is timely. d. Objectives of financial reporting. -&"? o`SD772,)AQi1er+ relevant financial information. faithful representation is complete, neutral, and free from error. Faithful representation Faithful representation is one of the qualitative characteristics of financial information that enhances reliability. For example, an entity may decide as a matter of normal business policy to rectify, faults in its products even after the warranty period has expired. Information has predictive value and b. Incorrect. a. Comparability and understandability Information must be decision-useful to all users. Statement Il. information for decision-making purposes. Faithful representation False Correct. to provide additional disclosures when compliance with the specific equirements in IFRSs is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entitys financial position and financial performance. 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