2013-09-20T13:59:51+02:00 ^`G#Y;1Kd>wJ0 tTK They are defined as follows: Faithful representation this means that financial information must be complete, neutral and free from error. information with reasonable diligence. measurement method is refer to new projects undertaken. it has confirmatory value) or both. The idea of consistency does not mean that entities 1 Question 1: Relevance, faithful representation, comparability, verifiability, timeliness and understandability. When financial information is relevant and faithfully represents the underlying economic phenomena, its usefulness is enhanced by comparability, verifiability, timeliness, and understandability. The process would require considering both relevance and faithful representation of the information produced by the new standard. Relevant information must be free from error, neutral and complete. Accounting information is presented in a simple way so that everyone can understand it. Different users use information for different purposes, so it would be very difficult if not impossible to verify that information was relevant. ihrAG+Rhk\-[e8/Bf! MvKT`&Ih*4MY,gz PWqfc %8&; 7;+0yrf$#Fy#q@f"V JBb{{g&~wu}&X to represent is an example of the concept of 0000015126 00000 n b. 0000004148 00000 n represent. a. an example of conservatism. When they are unable to understand the information presented, the IASB recommends using an adviser. Correct. the users and the decision made is Correct. of the phenomenon. xmp.id:0E2B5AB4072068118A6DEAF31C0948FD proof:pdf The Conceptual And Regulatory Framework A1. If there is a continuing series of "errors" that tend to bias the results of the financial statements in a certain direction, this may be considered a case of financial reporting fraud. 192 0 obj <>stream sS0S~_O)~?/S~_H~RO"Nt =g3/^U8Aj!T f xeK@J""8 88hADR[JmZ"I:/KEDgxy~^7 Pz"RRt $oV$SXlBqD L>9=N$9B-LD i=5Y6 )wv60 f 0000020701 00000 n Which of the following relates to both relevance 0000007336 00000 n ` . independent measures using the same Faithful presentation is one of the qualitative. conditions and events that is intended to Such conflicts might be resolved in at least four distinct ways. Free from error b. Faithful representation is affected by the use of estimates and by uncertainties, associated with items recognised and measured in financial statements. 6gWZs$t|2IPde9998J1+S%q/nk`hFd4)C[x9$">2P V8#`e8Ik6 0000021086 00000 n 0000064021 00000 n False the detriment of others who may have opposing b. a. Relevance c. Indicative of purchasing power To help to achieve comparability, the same items should be presented and measured in the same way in financial reports from year to year. In case of conflict between economic substance and legal form of a transaction, the economic substance shall prevail. 0000006227 00000 n Created at 10/23/2012 11:53 AM by System Account, (GMT) Greenwich Mean Time : Dublin, Edinburgh, Lisbon, London, Last modified at 11/30/2012 11:42 AM by System Account, Auditors' responsibilities regarding fraud, Auditors' responsibilities regarding laws & regulations, Reporting to those charged with governance, Reporting deficiencies in internal control systems, The components of an internal control system, The scope and regulation of audit and assurance, Critical success factors and core competences, Non-financial performance indicators (NFPIs), Theories of corporate social responsibility, Conflicts of interest and ethical threats, The consolidated statement of financial position, Controlling the Financial Reporting System, The trial balance and errors in the FR system, The Context and Purpose of Financial Reporting, International Financial Reporting Standards, Chapter 4: Types of cost and cost behaviour, Chapter 5: Ordering and accounting for inventory, Chapter 9: Marginal and absorption costing, Chapter 10: Books of prime entry and control accounts, Chapter 11: Control account reconciliations, Chapter 13: Correction of errors and suspense accounts, Chapter 18: Consolidated statement of financial position, Chapter 19: Consolidated income statement, Chapter 2: Statement of financial position and income statement, Chapter 20: Interpretation of financial statements, Chapter 21: The regulatory and conceptual framework, Chapter 7: Irrecoverable debts and allowances for receivables, Chapter 9: From trial balance to financial statements, Chapter 1: Essential elements of legal systems, Chapter 2: International business transactions: formation of the contract, Chapter 3: International business transactions: obligations, Chapter 4: International business transactions: risk and payment, Chapter 5: International business forms agency, Chapter 6: Types of Business Organisation, Chapter 7: Corporations and legal personality, Chapter 1: Traditional and advanced costing methods, Chapter 11: Performance measurement and control, Chapter 12: Divisional performance measurement and transfer pricing, Chapter 13: Performance measurement in not-for-profit organisations, Chapter 3: Planning with limiting factors, Chapter 5: Make or buy and other short-term decisions, Chapter 9: Standard costing and basic variances, Chapter 15: Additional practice questions, Chapter 4: Ethics and acceptance of appointment, Chapter 1: The financial management function, Chapter 10: Working capital management cash and funding strategies, Chapter 19: Business valuations and market efficiency, Chapter 2: Capital budgeting and basic investment appraisal techniques, Chapter 3: Investment appraisal discounted cash flow techniques, Chapter 4: Investment appraisal further aspects of discounted cash flows, Chapter 5: Asset investment decisions and capital rationing, Chapter 6: Investment appraisal under uncertainty, Chapter 8: Working capital management inventory control, Chapter 9: Working capital management accounts receivable and payable, Chapter 10: Risk and the risk management process, Chapter 13: Professional and corporate ethics, Chapter 15: Social and environmental issues, Chapter 2: Development of corporate governance, Chapter 5: Relations with shareholders and disclosure, Chapter 6: Corporate governance approaches, Chapter 7: Corporate social responsibility and corporate governance, Chapter 1: The nature of strategic business analysis, Chapter 10: The role of information technology, Chapter 12: Project management I The business case, Chapter 13: Project management II Managing the project to its conclusion, Chapter 16: Strategic development and managing strategic change, Chapter 2: The environment and competitive forces, Chapter 3: Internal resources, capabilities and competences, Chapter 4: Stakeholders, governance and ethics, Chapter 5: Strategies for competitive advantage, Chapter 6: Other elements of strategic choice, Chapter 7: Methods of strategic development, Chapter 1: The role and responsibility of the financial manager, Chapter 11: Corporate failure and reconstruction, Chapter 13: Hedging foreign exchange risk, Chapter 15: The economic environment for multinationals, Chapter 16: Money markets and complex financial instruments, Chapter 17: Topical issues in financial management, Chapter 2: Investment appraisal methods incorporating the use of free cash flows, Chapter 3: The weighted average cost of capital (WACC), Chapter 4: Risk adjusted WACC and adjusted present value, Chapter 5: Capital structure (gearing) and financing, Chapter 7: International investment and financing decisions, Chapter 9: Strategic aspects of acquisitions, Chapter 1: Introduction to strategic management accounting, Chapter 10: Non-financial performance indicators and corporate failure, Chapter 11: The role of quality in performance management, Chapter 12: Current developments in performance management, Chapter 4: Changes in business structure and management accounting, Chapter 5: The impact of information technology, Chapter 6: Performance measurement systems and design and behavioural aspects, Chapter 7: Financial performance measures in the private sector, Chapter 8: Divisional performance appraisal and transfer pricing, Chapter 9: Performance management in not-for-profit organisations, Chapter 6: Order quantities and reorder levels, The%20Consolidated%20Statement%20of%20Financial%20Position, The qualitative characteristics of financial information, The Trial Balance and Errors in the Financial Reporting System, Auditors' Responsibilities Regarding Fraud, Auditors' Responsibilities Regarding Laws and Regulations, Budgeting in not-for-profit organisations, Corporate social responsibility and management systems, Development%20of%20corporate%20governance, Environmental Management Accounting (EMA), Fitzgerald and Moon's Building Block Model, International%20Federation%20of%20Accountants, Mintzberg - The ten skills of the manager, Professional advice and negligent misstatement, The%20Code%20of%20Ethics%20for%20Professional%20Accountants, Unfair Terms in Consumer Contract Regulations 1999, Using option pricing theory to value equity, Using probability theory to determine credit spreads, ACCA P5 - Advanced Performance Management, AAT- Prepare Financial Accounts for Sole Traders and Partnerships (FSTP) Exam, AAT-Control Accounts, Journals and the Banking System(CJBS) Exam, AAT-Processing Bookkeeping Transactions(PBKT) Exam, AAT- Internal Control and Accounting Systems (ISYS), Modification Through Additional Paragraphs, Chapter 10: Working capital management cash and funding strategies. transaction and judgement is required to provide the appropriate balance. Correct. Understandability information should be understandable to those that might want to review and use it. d. Neutrality and consistency, Which qualitative characteristic of financial Important aspects, A legal debt constitutes a liability, but a liability is not restricted to being a legal, debt. 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Understandability Relevance vs. faithful representation 2. 0000015516 00000 n 0000005519 00000 n 2013-09-20T13:59:51+02:00 consensus. 0000059205 00000 n 0000003488 00000 n b. Quantitative characteristics of financial Key words: Relevance, faithful representation, cash-basis, accrual-basis, fair value, GAAP, tax reporting. Small expenditures for tools are expensed b. Verifiability Relevance (primary characteristic)Information is relevant if it makes a difference to decision makers in their role as Readers of financial reports are assumed to have sufficient knowledge of business and economic events in order to make sense of what they are presented with. 0000097234 00000 n 0000096849 00000 n Accounting can involve very complex calculations, details and disclosures. accounting matters. 15 older the information, the less useful. 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