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The difference between debt and equity in an entity’s statement of financial position is not easily distinguishable for preparers of financial statements. Debts and equity financial instruments may have similar characteristics, which may lead to inconsistency of reporting.
Required:
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Briefly explain the following fundamental accounting concepts used in the preparation of financial statements in accordance with IAS 1 – Presentation of financial statement:
i. Going concern (2 Marks)
ii. Consistency of presentation (2 Marks)
iii. Accrual (2 Marks)
iv. Fair presentation (2 Marks)
v. Substance over form (2 Marks)
vi. Prudence (2 Marks)
vii. Materiality (2 Marks)
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The IASB Conceptual Framework for Financial Reporting provides a conceptual underpinning of IFRS. The objective of general-purpose financial reporting forms the foundation of the conceptual framework.
Required:
a. Explain the objective of general purpose financial statements and the nature of the information in the statements. (6 Marks)
b. Define the following concepts and explain the significance of each on financial reporting.
i. Materiality (5 Marks)
ii. Consistency (5 Marks)
iii. Offsetting (4 Marks)
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Comparability is one of the enhancing qualitative characteristics of useful financial information. Comparability improves the usefulness of financial statements and it is achieved by consistency.
Required:
Explain the role of consistency in relation to changes in accounting policy and the need for comparability.
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Find Related Questions by Tags, levels, etc.
(a) Two of the enhancing qualitative characteristics of useful financial information contained in the IASB’s Conceptual Framework for Financial Reporting are understandability and comparability.
Required:
Explain the meaning and purpose of the above characteristics in the context of financial reporting and discuss the role of consistency within the characteristic of comparability in relation to changes in accounting policy. (6 marks)
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You are the Chief Operations Officer and a member of the board of directors of a reputable firm that has operations in all ten regions of Ghana. The board is currently deliberating on a strategy to decentralize the administrative function in order to promote flexibility in administration across all the operational areas of the company. You feel strongly that this move will be detrimental to the prospects of the company and has therefore spoken against it. The Chairman of the board has, therefore, asked you to submit a short memo to argue out your position.
Required: In a memo to the Chairman of the board, explain THREE reasons why you believe your company should maintain the current centralised administrative department. (6 marks)
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It is understood that different users require financial information for assistance in their economic decisions. Financial statements need to have certain characteristics or adhere to certain accounting principles in order to be useful to its users.
Required:
In relation to the statement above, write brief notes about the following:
i) Consistency
ii) Completeness
iii) Materiality
iv) Going concern
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
The difference between debt and equity in an entity’s statement of financial position is not easily distinguishable for preparers of financial statements. Debts and equity financial instruments may have similar characteristics, which may lead to inconsistency of reporting.
Required:
Find Related Questions by Tags, levels, etc.
Briefly explain the following fundamental accounting concepts used in the preparation of financial statements in accordance with IAS 1 – Presentation of financial statement:
i. Going concern (2 Marks)
ii. Consistency of presentation (2 Marks)
iii. Accrual (2 Marks)
iv. Fair presentation (2 Marks)
v. Substance over form (2 Marks)
vi. Prudence (2 Marks)
vii. Materiality (2 Marks)
Find Related Questions by Tags, levels, etc.
The IASB Conceptual Framework for Financial Reporting provides a conceptual underpinning of IFRS. The objective of general-purpose financial reporting forms the foundation of the conceptual framework.
Required:
a. Explain the objective of general purpose financial statements and the nature of the information in the statements. (6 Marks)
b. Define the following concepts and explain the significance of each on financial reporting.
i. Materiality (5 Marks)
ii. Consistency (5 Marks)
iii. Offsetting (4 Marks)
Find Related Questions by Tags, levels, etc.
Comparability is one of the enhancing qualitative characteristics of useful financial information. Comparability improves the usefulness of financial statements and it is achieved by consistency.
Required:
Explain the role of consistency in relation to changes in accounting policy and the need for comparability.
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
(a) Two of the enhancing qualitative characteristics of useful financial information contained in the IASB’s Conceptual Framework for Financial Reporting are understandability and comparability.
Required:
Explain the meaning and purpose of the above characteristics in the context of financial reporting and discuss the role of consistency within the characteristic of comparability in relation to changes in accounting policy. (6 marks)
Find Related Questions by Tags, levels, etc.
You are the Chief Operations Officer and a member of the board of directors of a reputable firm that has operations in all ten regions of Ghana. The board is currently deliberating on a strategy to decentralize the administrative function in order to promote flexibility in administration across all the operational areas of the company. You feel strongly that this move will be detrimental to the prospects of the company and has therefore spoken against it. The Chairman of the board has, therefore, asked you to submit a short memo to argue out your position.
Required: In a memo to the Chairman of the board, explain THREE reasons why you believe your company should maintain the current centralised administrative department. (6 marks)
Find Related Questions by Tags, levels, etc.
It is understood that different users require financial information for assistance in their economic decisions. Financial statements need to have certain characteristics or adhere to certain accounting principles in order to be useful to its users.
Required:
In relation to the statement above, write brief notes about the following:
i) Consistency
ii) Completeness
iii) Materiality
iv) Going concern
Find Related Questions by Tags, levels, etc.
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