Chapter 1

CONCEPTUAL FRAMEWORK FOR FINANCIAL REPORTING

Assessment Tasks No. 13

1. Understandability
2. Faithful representation, neutrality
3. Faithful representation, completeness
4. Completeness, relevance, comparability
5. Faithful representation, verifiability
6. Faithful representation, completeness
7. Understandability
8. Relevance, timeliness

Assessment Tasks No. 14

1. Correct
2. Incorrect, no particular presentation requirements are discussed in the Framework.
3. Correct
4. Incorrect, understandability is not an excuse to omit complex information in the financial
statements. Users are expected to possess basic business knowledge and to exercise
diligence.
5. Correct
6. Incorrect, expenses do not involve transactions with owners.
7. Incorrect, an entity shall not leave its accounting policy unchanged if management assesses
that another method of accounting will more relevantly and reliably present enterprise
performance and financial position.
8. Incorrect, understandability depends on two factors: the quality of the information and the
characteristics of the users.
9. Incorrect, an information loses its relevance if it is not communicated early enough for
decision making needs of the users.
10. Correct
11. Incorrect, there is no standard form for the presentation of financial statements; the
management prepares the financial statements using form that will best communicate to
users the enterprise’s financial position, performance and other changes in financial position.
12. Incorrect, the main objective of consistency is to present actual similarities and differences
between reporting periods and between enterprises, and not to smooth profit.
13. Incorrect, the financial capital concept does not limit the measurement basis of financial
statement elements to only one type.
14. Correct

1
Assessment Tasks No. 15
1. Fair value (current cost)
2. Present value
3. Historical cost and net realizable value
4. Historical cost and current cost
5. Historical cost and current cost
6. Current cost
7. Current cost
8. Present value
9. Historical cost and current cost
10. Historical cost and net realizable value
11. Present value
12. Present value
13. Combination of historical cost, current cost, present value and realizable value
14. Historical cost
15. Present value

Multiple Choice Questions

MC1 B MC11 B MC21 B MC31 C MC41 A

MC2 C MC12 C MC22 B MC32 A MC42 B
MC3 C MC13 A MC23 A MC33 C MC43 C
MC4 B MC14 C MC24 C MC34 B MC44 B
MC5 D MC15 C MC25 C MC35 A MC45 B
MC6 C MC16 A MC26 B MC36 D MC46 D
MC7 A MC17 D MC27 A MC37 D MC47 C
MC8 B MC18 D MC28 A MC38 D MC48 D
MC9 C MC19 C MC29 A MC39 B
MC10 A MC20 A MC30 B MC40 B