Question Tag: Prudence

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CR – Nov 2021 – L3 – Q7 – Introduction to Corporate Reporting

Evaluate prudence reintroduction, revised asset and liability definitions in the Conceptual Framework.

The Conceptual Framework 2010 was criticized for its lack of clarity, the exclusion of certain important concepts, and for being outdated in terms of the IASB’s current thinking. The revised Conceptual Framework 2018 includes some new concepts such as prudence, provides updated definitions and recognition criteria for assets and liabilities, and clarifies some important concepts in a well-arranged eight chapters. Chapter four of the revised Conceptual Framework 2018 on elements of financial statements redefined some basic elements and concepts.

Required:

a. Evaluate the arguments for and against re-introduction of prudence into the Conceptual Framework.
(7 Marks)

b. Identify TWO of the concepts (Asset and Liability) which definitions were revised and justify the reasons for revised definitions.
(8 Marks)

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FA – May 2012 – L1 – SA – Q28 – Accounting for Inventories (IAS 2)

Identifying the accounting concept that guides the treatment of known losses and inventory valuation.

Borox Limited makes provision for all known losses and values its inventories at the lower of cost and net realizable value. Which accounting concept is the company complying with?

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FA – May 2021 – L1 – SB – Q1a – Accounting Concepts

Explanation of seven fundamental accounting concepts used in financial statement preparation.

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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FA – May 2021 – L1 – SA – Q2 – Accounting Concepts

Identifies the principle applied when inventory is recognized at net realizable value.

Inventories are recognised at the net realisable value when this is lower than the cost price in order to satisfy the ……….. principle.

A. Matching
B. Prudence
C. Accrual
D. Periodicity
E. Realisation

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CR – Nov 2021 – L3 – Q7 – Introduction to Corporate Reporting

Evaluate prudence reintroduction, revised asset and liability definitions in the Conceptual Framework.

The Conceptual Framework 2010 was criticized for its lack of clarity, the exclusion of certain important concepts, and for being outdated in terms of the IASB’s current thinking. The revised Conceptual Framework 2018 includes some new concepts such as prudence, provides updated definitions and recognition criteria for assets and liabilities, and clarifies some important concepts in a well-arranged eight chapters. Chapter four of the revised Conceptual Framework 2018 on elements of financial statements redefined some basic elements and concepts.

Required:

a. Evaluate the arguments for and against re-introduction of prudence into the Conceptual Framework.
(7 Marks)

b. Identify TWO of the concepts (Asset and Liability) which definitions were revised and justify the reasons for revised definitions.
(8 Marks)

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FA – May 2012 – L1 – SA – Q28 – Accounting for Inventories (IAS 2)

Identifying the accounting concept that guides the treatment of known losses and inventory valuation.

Borox Limited makes provision for all known losses and values its inventories at the lower of cost and net realizable value. Which accounting concept is the company complying with?

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FA – May 2021 – L1 – SB – Q1a – Accounting Concepts

Explanation of seven fundamental accounting concepts used in financial statement preparation.

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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FA – May 2021 – L1 – SA – Q2 – Accounting Concepts

Identifies the principle applied when inventory is recognized at net realizable value.

Inventories are recognised at the net realisable value when this is lower than the cost price in order to satisfy the ……….. principle.

A. Matching
B. Prudence
C. Accrual
D. Periodicity
E. Realisation

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