chapter 2 - conceptual framework

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• How is an asset defined in the conceptual framework? A present economic resource controlled by the entity
• Which of the following is not included in the objective for the IASB Conceptual framework? not included: The first accounting standards issued, IFRS1, relates to the conceptual framework. included: A set of fundamental principles which underpin financial accounting, Without a conceptual framework accounting standards are more difficult to develop, Objective, elements, recognized, presented
• Which are the four enhancing qualitative characteristics? Comparability, timeliness, verifiability. neutrality is not included
• Explain “relevance” The financial information has predictive and confirmative value
• How is equity defined? The residual interest in the assets of the entity after deducting all liabilities
• What other users than the primary users rely in financial information and the IFRS? Customers, employees, governments. Management is not included
• What is a perfectly “faithful representation”? Complete, neutral, free from error
• Which are the important users of financial information according to the framework? Lenders, investors, creditors. General public is not included
• What are the three ways to measure current value? The amount that would have to be paid to acquire an equivalent asset, The price to be received to sell an asset between market participants, The present value of the net cash flows that the entity expects from the use. The amount paid to acquire an asset is not included
• How is a liability defined? A present obligation to transfer economic resources

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