- 20 Marks
FA – May 2019 – L1 – Q5 – Accruals and prepayments The IASB’s Conceptual Framework
Discuss internal and external users of accounting information, elements of financial statements, benefits of financial statements, accrual and going concern basis.
Question
The conceptual framework for financial reporting sets out the concepts that underlie the preparation and presentation of financial statements for users. The objectives of financial statements are to provide information about the financial position, performance, and changes in the financial position of an entity that is useful to a wide range of users in making economic decisions. Users of accounting information are classified into internal and external users.
According to the Framework of IAS/IFRS, the underlying assumptions for the preparation of financial statements are accrual basis and going concern basis.
Required:
a) State TWO (2) internal users and TWO (2) external users of accounting information and their information needs.
(4 marks)
b) Identify and explain FOUR (4) elements of financial statements.
(8 marks)
c) Identify FOUR (4) benefits that financial statements provide to its users.
(4 marks)
d) Explain what is meant by accrual basis of accounting. Illustrate your answer with a suitable example.
(2 marks)
e) Explain what is meant by going concern basis.
(2 marks)
Find Related Questions by Tags, levels, etc.
- Tags: Accrual Basis, External Users, Financial Reporting, Going Concern, Internal Users
- Level: Level 1
- Topic: Accruals and prepayments, The IASB’s Conceptual Framework
- Series: MAY 2019