F3 session 1

Which accounting concept states that omitting or misstating this information could influence users of financial statements?

• The consistency concept

• The accruals concept

• The materiality concept

• The going concern concept

Which of the following statements correctly describes how International Financial Reporting Standards (IFRSs) should be used?

• To provide examples of best financial reporting practice for national bodies who develop their own requirements

• To ensure high ethical standards are maintained by financial reporting professionals internationally

• To facilitate the enforcement of a single set of global financial reporting standards

• To prevent national bodies from developing their own financial reporting standards

Which accounting concept should be considered if the owner of a business takes goods from inventory for their own personal use?

• The materiality concept

• The accruals concept

• The going concern concept

• The business entity concept

Which of the following are true of partnerships?

1. The partners' individual exposure to debt is limited.

2. Financial statements for the partnership by law must be produced and made public.

3. A partnership is not a separate legal entity from the partner themselves.

• 1 and 2 only

• 2 only

• 3 only

• 1 and 3 only

Which of the following best describes corporate governance?

• Corporate governance is the system of rules and regulations surrounding financial reporting.

• Corporate governance is the system by which companies and other entities are directed and controlled.

• Corporate governance is carried out by the finance department in preparing the financial statements.

• Corporate governance is the system by which an entity monitors its impact on the natural environment.

Which of the following statement about prudence is correct?

• Prudence requires assets to be carried at their lowest possible valuation.

• When prudence is applied, income is not recognised until the cash has been received.

• A prudent decision will mean lower expenditure.

• Prudence does not allow for overstatement of liabilities.

Which of the following statements is/are true?

1. Directors of companies have a duty of care to show reasonable competence in their management of the affairs of a company.

2. Directors of companies must act honestly in what they consider to be the best interest of the company.

3. A director's main aim should be to create wealth for the shareholders of the company.

• 1 and 2 only

• 2 only

• 1, 2 and 3

• 1 and 3 only

Which of the following statements is/are true?

1. The IFRS Interpretations Committee is a forum for the International Accounting Standards Board (IASB) to consult with the outside world.

2. The IFRS Foundation produces IFRSs. The IFRS Foundation is overseen by the IASB.

3. One of the objectives of the IFRS Foundation is to bring about convergence of national accounting standards and IFRSs.

• 1 and 3 only

• 2 only

• 2 and 3 only

• 3 only

The IASB's Conceptual Framework gives six qualitative characteristics of financial information. What are these six characteristics?

• Relevance, Faithful representation, Comparability, Verifiability, Timeliness, and Understandability.

• Accuracy, Faithful representation, Comparability, Verifiability, Timeliness, and Understandability.

• Relevance, Faithful representation, Consistency, Verifiability, Timeliness, and Understandability.

• Relevance, Comparability, Consistency, Verifiability, Timeliness, and Understandability.

According to the IASB's Conceptual Framework, which TWO of the following are part of faithful representation?

1. Neutrality

2. Relevance

3. Fair presentation

4. Free from material error

• 1 and 2

• 2 and 3

• 1 and 4

• 3 and 4