Testbank
to accompany
Financial reporting
2nd edition
by
Loftus et al.
, Chapter 1: Accounting regulation and the conceptual framework
Chapter 1: Accounting regulation and the conceptual framework
Multiple choice questions
1. With regards to the Australian accounting standards, IASB stands for:
a. International Auditing Standards Board.
b. International Accounting Securities Body.
*c. International Accounting Standards Board.
d. International Accounting Statements Body.
Answer: c
Learning objective 1.3: 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. The IFRS Advisory Council is directly accountable to the Monitoring Board.
b. Australia adopted international accounting standards issued on or after 1 January 2005.
c. The IASB and IFRS Interpretations Committee are appointed and overseen by a
geographically and professionally diverse group called the IFRS Foundation Trustees.
d. The IASB is an independent standard-setting board that develops and approves
International Financial Reporting Standards.
Answer: a
Learning objective 1.3: explain the structure, role and processes of the International
Accounting Standards Board (IASB) and the IFRS Interpretations Committee (IFRIC).
3. Which of the following is not a chapter in the IASB’s conceptual framework?
a. the Framework.
b. qualitative characteristics of useful financial reporting.
c. the objective of general purpose financial reporting.
*d. the issues with financial reporting.
Answer: d
Learning objective 1.4: explain the key components of the conceptual framework.
© John Wiley and Sons Australia, Ltd 2018 1.1
,Testbank to accompany Financial reporting 2e by Loftus et al.
4. Which of the following statements about the conceptual framework is true?
a. The conceptual framework deals only with the objective of special purpose financial
statements.
b. The Conceptual Framework for Financial Reporting provides guidelines intended to meet
the information needs of a range of users who are able to command that reports be prepared
to their own particular needs.
*c. The conceptual framework deals only with the objective of general purpose financial
statements.
d. the Conceptual Framework for Financial Reporting, SAC 1, and SAC 2 provides
guidelines on the preparation of financial statements for a specific group of users.
Answer: c
Learning objective 1.4: explain the key components of the conceptual framework.
5. The two fundamental qualitative characteristics of useful information are:
a. materiality and timeliness.
b. understandability and verifiability.
c. faithful representation and comparability.
*d. relevance and faithful representation.
Answer: d
Learning objective 1.5: explain the qualitative characteristics that make information in
financial statements useful.
6. For information to be considered material:
a. it must be complete.
b. it must not include any bias.
*c. its omission or misstatement could influence users’ decision-making.
d. it has a predictive or confirmatory value.
Answer: c
Learning objective 1.5: explain the qualitative characteristics that make information in
financial statements useful.
© John Wiley and Sons Australia, Ltd 2018 1.2
, Chapter 1: Accounting regulation and the conceptual framework
7. Costs of providing useful information include:
a. collection and processing costs.
b. dissemination costs.
c. verification costs.
*d. All of these options are costs of providing useful information.
Answer: d
Learning objective 1.5: explain the qualitative characteristics that make information in
financial statements useful.
8. If different independent observers could reach the same general conclusions that the
information represents then the quality of the information has achieved:
a. neutrality.
b. understandability.
*c. verifiability.
d. comparability.
Answer: c
Learning objective 1.5: explain the qualitative characteristics that make information in
financial statements useful.
9. Which of the following statements about the going concern assumption is not true?
a. it can justify the use of historical costs when measuring non-current assets.
b. it supports the use of assets such as Prepaid Expenses.
c. it supports the systematic allocation of depreciation over an asset’s useful life.
*d. it is used when an entity goes into liquidation.
Answer: d
Learning objective 1.6: discuss the going concern assumption underlying the preparation of
financial statements.
© John Wiley and Sons Australia, Ltd 2018 1.3
to accompany
Financial reporting
2nd edition
by
Loftus et al.
, Chapter 1: Accounting regulation and the conceptual framework
Chapter 1: Accounting regulation and the conceptual framework
Multiple choice questions
1. With regards to the Australian accounting standards, IASB stands for:
a. International Auditing Standards Board.
b. International Accounting Securities Body.
*c. International Accounting Standards Board.
d. International Accounting Statements Body.
Answer: c
Learning objective 1.3: 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. The IFRS Advisory Council is directly accountable to the Monitoring Board.
b. Australia adopted international accounting standards issued on or after 1 January 2005.
c. The IASB and IFRS Interpretations Committee are appointed and overseen by a
geographically and professionally diverse group called the IFRS Foundation Trustees.
d. The IASB is an independent standard-setting board that develops and approves
International Financial Reporting Standards.
Answer: a
Learning objective 1.3: explain the structure, role and processes of the International
Accounting Standards Board (IASB) and the IFRS Interpretations Committee (IFRIC).
3. Which of the following is not a chapter in the IASB’s conceptual framework?
a. the Framework.
b. qualitative characteristics of useful financial reporting.
c. the objective of general purpose financial reporting.
*d. the issues with financial reporting.
Answer: d
Learning objective 1.4: explain the key components of the conceptual framework.
© John Wiley and Sons Australia, Ltd 2018 1.1
,Testbank to accompany Financial reporting 2e by Loftus et al.
4. Which of the following statements about the conceptual framework is true?
a. The conceptual framework deals only with the objective of special purpose financial
statements.
b. The Conceptual Framework for Financial Reporting provides guidelines intended to meet
the information needs of a range of users who are able to command that reports be prepared
to their own particular needs.
*c. The conceptual framework deals only with the objective of general purpose financial
statements.
d. the Conceptual Framework for Financial Reporting, SAC 1, and SAC 2 provides
guidelines on the preparation of financial statements for a specific group of users.
Answer: c
Learning objective 1.4: explain the key components of the conceptual framework.
5. The two fundamental qualitative characteristics of useful information are:
a. materiality and timeliness.
b. understandability and verifiability.
c. faithful representation and comparability.
*d. relevance and faithful representation.
Answer: d
Learning objective 1.5: explain the qualitative characteristics that make information in
financial statements useful.
6. For information to be considered material:
a. it must be complete.
b. it must not include any bias.
*c. its omission or misstatement could influence users’ decision-making.
d. it has a predictive or confirmatory value.
Answer: c
Learning objective 1.5: explain the qualitative characteristics that make information in
financial statements useful.
© John Wiley and Sons Australia, Ltd 2018 1.2
, Chapter 1: Accounting regulation and the conceptual framework
7. Costs of providing useful information include:
a. collection and processing costs.
b. dissemination costs.
c. verification costs.
*d. All of these options are costs of providing useful information.
Answer: d
Learning objective 1.5: explain the qualitative characteristics that make information in
financial statements useful.
8. If different independent observers could reach the same general conclusions that the
information represents then the quality of the information has achieved:
a. neutrality.
b. understandability.
*c. verifiability.
d. comparability.
Answer: c
Learning objective 1.5: explain the qualitative characteristics that make information in
financial statements useful.
9. Which of the following statements about the going concern assumption is not true?
a. it can justify the use of historical costs when measuring non-current assets.
b. it supports the use of assets such as Prepaid Expenses.
c. it supports the systematic allocation of depreciation over an asset’s useful life.
*d. it is used when an entity goes into liquidation.
Answer: d
Learning objective 1.6: discuss the going concern assumption underlying the preparation of
financial statements.
© John Wiley and Sons Australia, Ltd 2018 1.3
