Chapter 6 - Normative Theory Framework projects - P2 | Take the Quiz

Which of the following is a qualitative characteristic of financial information in general purpose financial reports, if they are to be useful?

A. Understandability

B. Comparability

C. Reliability

D. All of the given options are correct.

Which characteristic of information, when omitted or misstated, could influence economic decisions taken by users on the basis of financial statements?

A. Relevance

B. Reliability

C. Materiality

D. Comparability

Which of the following is a characteristic of reliability?

A. It influences economic decisions

B. It represents faithfully what it purports to represent.

C. It provides predictive value and feedback to confirm or correct earlier expectations.

D. None of the given options are correct.

Which of the following represents a contradiction, rather than a trade-off that needs to be balanced?

A. Information may be reliable, but the time taken to ensure its reliability may result in it being potentially irrelevant.

B. Determining whether the benefits derived from information are greater than the costs to produce it.

C. The argument for neutrality and faithful representation; but standard-setters consider the economic consequences of standards.

D. Information may be relevant, but the data may be so unreliable that it could be potentially misleading.

Which of the following is not a characteristic of an asset, according to the IASB Conceptual Framework?

A. There is an expected future economic benefit

B. The entity must have ownership over the resource giving rise to the future economic benefits.

C. The transaction or event giving rise to the ownership over future economic benefits must have occurred.

D. The reporting entity must have control over the resource to benefit from it, or to deny or regulate the access of others to the benefit.

Which of the following is not a characteristic of a liability, according to the IASB Conceptual Framework?

A. A future deposition or transfer of economic benefits to others will occur.

B. A past transaction or event is to have created the obligation.

C. There must be a legal obligation

D. None of the given options are correct

Which of the following will satisfy the definition of a 'constructive liability' , as outlined in the IASB Conceptual Framework?

A. A decision by management to carry out maintenance over the next two years

B. A public offer to repair a defective good, even if it is out of warranty

C. A parent company's guarantee to meet the debts of a subsidiary entity if the subsidiary itself cannot pay them

According to the IASB definition of 'income' , which of the following is not included?

A. Non-reciprocal transfers such as grants, bequests or liabilities forgiven

B. Gains and losses from the sale of assets

C. Enhancement of assets

D. Dividends received

Which of the following is true in relation to expenses, according to the IASB Conceptual Framework?

A. Expenses are restricted to transactions and events relating to 'ongoing major or central operations

B. There is no reference to matching of revenue and expenses in the Conceptual Framework.

C. Expenses would not include losses that were not under the control of the entity, such as uninsured losses of assets from flood.

D. None of the given options are correct.

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Chapter 6 - Normative Theory Framework projects - P2

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