Test Bank For Applying IFRS Standards 4th Edition Ruth Picker

Multiple Choice Questions

1. Which of the following statements is INCORRECT?

Learning Objective 1.1 Describe the organisational structure of the key players in setting IFRSs:

*a.        The International Accounting Standards Board was replaced by the International Standards Committee in 2001.

1. The International Accounting Standards Board is funded by the IASC Foundation.
2. The responsibility for issuing International Financial Reporting Standards lies with the International Accounting Standards Board.
3. Members of the International Accounting Standards Board are appointed by the IFRS Foundation.

2. Which of the following bodies report to the IFRS Foundation?

Learning Objective 1.1 Describe the organisational structure of the key players in setting IFRSs:

1. The IASB and AASB
2. The IASB, AASB and the IFRS Advisory Council
3. The IASB and the FASB

*d.        The IASB and the IFRS Advisory Council

3. Which of the following statements is INCORRECT?

Learning Objective 1.2 Describe the purpose of a conceptual framework – who uses it and why

1. The Framework identifies the qualitative characteristics that make information in financial statements useful.

*b.        The Framework defines principles for accounting recognition, measurement and disclosure.

1. The Framework defines the objective of financial statements.
2. The Framework defines the basic elements of financial statements and the concepts for recognizing and measuring them in financial statements.

4. Which of the following statements is CORRECT?

Learning Objective 1.2 Describe the purpose of a conceptual framework – who uses it and why

*a.        IAS 8 Accounting Policies, Changes in Accounting Estimates, and Errors requires that The Framework be followed in the absence of a specific standard or interpretation.

1. IAS 8 Accounting Policies, Changes in Accounting Estimates, and Errors recommends, but does not require The Framework to be followed in the absence of a specific standard or interpretation.
2. The Framework is used solely by the IASB when considering new accounting issues.
3. The Framework is non-binding guidance which does not have to be followed by preparers of financial statements.

5. The Framework focuses on:

Learning Objective 1.2 Describe the purpose of a conceptual framework – who uses it and why

1. privately owned business entities only.

*b.        business entities only, including private and state owned business entities.

1. business entities, although the concepts may be applied to other types of entities, such as not-for profit entities.
2. all types of entities, including business entities, government and not-for profit entities.

6. General Purpose Financial Statements:

Learning Objective 1.2 Describe the purpose of a conceptual framework – who uses it and why

1. are only necessary for users who do not have the power to obtain information in addition to that contained within the General Purpose Financial Statement.
2. provide all the information that users may need to make economic decisions.
3. focus on disclosing information relevant to assessing the ability of an entity to generate future cash flows.

*d.        meet the information needs that are common to all users.