CFAS - Seatwork - ddddddddddddddddddddddddddddddddddddddddddddddddddddddddd PDF

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TOPIC 2 | CONCEPTUAL FRAMEWORK Self-Check Basing on your readings, answer the following questions. 1. Enumerate the scope of Conceptual Framework. 2. Enumerate the qualitative characteristics of useful financial information. 3. What is the difference between relevance and faithful representation? 4. What are the elements of financial statements? 5. What are the recognition criteria that meets the definition of an element? 6. What are the different measurement bases of the elements of financial statements?

Exercise 2.1 TRUE OR FALSE Determine whether the following statements are true or false. ___________1. When there is a conflict between the Conceptual Framework and IFRS Standard, the former overrides the requirements of the latter. ___________2. Understandability means that different knowledgeable and independent observers could reach consensus. ___________3. Financial information is capable of making a difference in decisions if it has predictive value, confirmatory value or both. ___________4. The enhancing qualitative characteristics, either individually or as a group, can make information useful regardless if that information is irrelevant or not faithfully represented. ___________5. Obligations may also arise from an entity’s customary practices, published policies or specific statements if the entity has no practical ability to act in a manner inconsistent with those practices, polices or statements. ___________6. Under a financial concept, capital is synonymous with the net assets or equity of the entity ___________7. A liability is defined as a present obligation of the entity to receive an economic resource as a result of past events. ___________8. Comparability, verifiability, neutral and understandability are qualitative characteristics that enhance the usefulness of information that is relevant and faithfully represented. ___________9. Information is material if omitting it or misstating it could influence decisions that users make on the basis of financial information about a specific reporting entity. ___________10. Information about the performance of a reporting entity helps users to understand the return that the entity has produced from its economic resources which is an indication of how well management has discharged its stewardship responsibilities.

Exercise 2.2 IDENTIFICATION Identify the terminologies best described by the following statements. ___________1. It is recognized when it is probable that an outflow of resources embodying economic benefits will result from the settlement of a present obligation and the amount at which the settlement will take place can be measured reliably. ___________2. It is the process of capturing for inclusion in the statement of financial position or the statement of financial performance an item that meets the definition of an asset, a liability, equity, income or expenses. ___________3. It is the qualitative characteristic that enables users to identify and understand similarities in, and differences among items. ___________4. These portray the financial effects of transactions and other events by grouping them into broad classes. ___________5. It is a pervasive constraint on the information that can be provided by financial reporting ___________6. Obligations that arise from an entity’s customary practices, published policies or specific statements. ___________7. A depiction that includes all information necessary for a user to understand the phenomenon being

depicted, including all necessary descriptions and explanations.

___________8. It is a duty or responsibility to act or perform in certain way. ___________9. It means having information available to decision-makers in time to be capable of influencing their decisions. ___________10. It refers to the use of the same methods for the same items, either from period to period within a reporting entity or in a single period across entities....