Testbank
For
Financial Reporting
by
Loftus et al
Prepared by Hong Nee Ang
, Testbank to accompany: Financial Reporting 1e by Loftus et al.
Chapter 1:
Accounting regulation and
the conceptual framework
Multiple Choice Questions
1) Members of the IASB are appointed by:
a) the Monitoring Board.
b) the IFRS Advisory Council.
*c) the IFRS Foundation Trustees.
d) the IFRS Interpretations Committee.
Answer: c
Learning Objective 3: Explain the structure, role and processes of the International Accounting
Standards Board (IASB) and the IFRS Interpretations Committee (IFRIC)
2) Which of the following statements is false:
*a) Members of the IFRS Interpretations Committee are appointed by the IASB.
b) The IFRS Advisory Council provides strategic advice to the IASB.
c) Compliance with IASB standards includes compliance with interpretations issued by IFRS
Interpretations Committee.
d) IFRS Foundation Trustees appoint members of both IASB and IFRS Advisory Council.
Answer: a
Learning Objective 3: Explain the structure, role and processes of the International Accounting
Standards Board (IASB) and the IFRS Interpretations Committee (IFRIC)
© John Wiley & Sons Australia, Ltd 2016
2
, Testbank to accompany: Financial Reporting 1e by Loftus et al.
3) A conceptual framework consists of a set of principles with the purpose to:
a) assist users in the interpretation of information in financial statements.
b) assist preparers of financial statements in the application of accounting standards and in dealing
with topics that are not the subject of existing accounting standards.
c) assist standard setters to develop accounting standards.
*d) all of the options are correct.
Answer: d
Learning Objective 4: Explain the key components of the conceptual framework.
4) Currently the Australian conceptual framework comprises:
a) the Framework for the Preparation and Presentation of Financial Statements.
b) the Conceptual Framework for Financial Reporting.
*c) the Framework for the Preparation and Presentation of Financial Statements and SAC 1.
d) the Conceptual Framework for Financial Reporting, SAC 1, and SAC 2.
Answer: c
Learning Objective 4: Explain the key components of the conceptual framework
5) The two fundamental qualitative characteristics of useful information are:
a) materiality and relevance.
*b) relevance and faithful representation.
c) comparability and verifiability.
d) timeliness and understandability.
Answer: b
Learning Objective 5: Explain the qualitative characteristics that make information in financial
statements useful
© John Wiley & Sons Australia, Ltd 2016
3
, Testbank to accompany: Financial Reporting 1e by Loftus et al.
6) Information is considered material if:
a) it has predictive value.
*b) its omission or misstatement could influence users’ decision-making.
c) it includes all information necessary for faithful representation.
d) it is free from errors.
Answer: b
Learning Objective 5: Explain the qualitative characteristics that make information in financial
statements useful
7) What is the constraint that limits the information provided by financial reporting?
a) Timeliness.
b) Materiality.
c) Comparability.
*d) Cost.
Answer: d
Learning Objective 5: Explain the qualitative characteristics that make information in financial
statements useful
8) A quality of information demonstrated when different independent observers could reach the
same general conclusions that the information represents what it purports to represent is:
*a) verifiability.
b) comparability.
c) understandability.
d) neutrality.
Answer: a
Learning Objective 5: Explain the qualitative characteristics that make information in financial
statements useful
© John Wiley & Sons Australia, Ltd 2016
4
For
Financial Reporting
by
Loftus et al
Prepared by Hong Nee Ang
, Testbank to accompany: Financial Reporting 1e by Loftus et al.
Chapter 1:
Accounting regulation and
the conceptual framework
Multiple Choice Questions
1) Members of the IASB are appointed by:
a) the Monitoring Board.
b) the IFRS Advisory Council.
*c) the IFRS Foundation Trustees.
d) the IFRS Interpretations Committee.
Answer: c
Learning Objective 3: Explain the structure, role and processes of the International Accounting
Standards Board (IASB) and the IFRS Interpretations Committee (IFRIC)
2) Which of the following statements is false:
*a) Members of the IFRS Interpretations Committee are appointed by the IASB.
b) The IFRS Advisory Council provides strategic advice to the IASB.
c) Compliance with IASB standards includes compliance with interpretations issued by IFRS
Interpretations Committee.
d) IFRS Foundation Trustees appoint members of both IASB and IFRS Advisory Council.
Answer: a
Learning Objective 3: Explain the structure, role and processes of the International Accounting
Standards Board (IASB) and the IFRS Interpretations Committee (IFRIC)
© John Wiley & Sons Australia, Ltd 2016
2
, Testbank to accompany: Financial Reporting 1e by Loftus et al.
3) A conceptual framework consists of a set of principles with the purpose to:
a) assist users in the interpretation of information in financial statements.
b) assist preparers of financial statements in the application of accounting standards and in dealing
with topics that are not the subject of existing accounting standards.
c) assist standard setters to develop accounting standards.
*d) all of the options are correct.
Answer: d
Learning Objective 4: Explain the key components of the conceptual framework.
4) Currently the Australian conceptual framework comprises:
a) the Framework for the Preparation and Presentation of Financial Statements.
b) the Conceptual Framework for Financial Reporting.
*c) the Framework for the Preparation and Presentation of Financial Statements and SAC 1.
d) the Conceptual Framework for Financial Reporting, SAC 1, and SAC 2.
Answer: c
Learning Objective 4: Explain the key components of the conceptual framework
5) The two fundamental qualitative characteristics of useful information are:
a) materiality and relevance.
*b) relevance and faithful representation.
c) comparability and verifiability.
d) timeliness and understandability.
Answer: b
Learning Objective 5: Explain the qualitative characteristics that make information in financial
statements useful
© John Wiley & Sons Australia, Ltd 2016
3
, Testbank to accompany: Financial Reporting 1e by Loftus et al.
6) Information is considered material if:
a) it has predictive value.
*b) its omission or misstatement could influence users’ decision-making.
c) it includes all information necessary for faithful representation.
d) it is free from errors.
Answer: b
Learning Objective 5: Explain the qualitative characteristics that make information in financial
statements useful
7) What is the constraint that limits the information provided by financial reporting?
a) Timeliness.
b) Materiality.
c) Comparability.
*d) Cost.
Answer: d
Learning Objective 5: Explain the qualitative characteristics that make information in financial
statements useful
8) A quality of information demonstrated when different independent observers could reach the
same general conclusions that the information represents what it purports to represent is:
*a) verifiability.
b) comparability.
c) understandability.
d) neutrality.
Answer: a
Learning Objective 5: Explain the qualitative characteristics that make information in financial
statements useful
© John Wiley & Sons Australia, Ltd 2016
4
