This multiple-choice question is suitable for Accounting KS5 classes.
The answer is 3
Not correct
Not correct
Correct – Financial information can make a difference to decisions if it has predictive value (it can be used to predict future outcomes) or confirmatory value (it provides feedback about previous evaluations).
According to IAS 1 Presentation of Financial Statements which two of the following are objectives of financial statements?
A To show the results of management’s stewardship of the resources entrusted to it B To provide a basis for valuing the entity C To provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions D To facilitate comparison of financial performance between entities operating in different industries E To assist management and those charged with governance in making timely economic decisions about deployment of the entity’s resources
Select ONE answer:
D & E
B & C
A & C
A & B
Show your workings to arrive at your answer, and explain and justify your reasons:
This multiple-choice question is suitable for Accounting KS5 classes.
The answer is 3
Not correct
Not correct
Correct – A and C – International Accounting Standard I (AS 1) Presentation of Financial Statements provides the objective of financial statements. It states that the objective of financial statements is to provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions (C). In addition, it states that the financial statements also show the results of management’s stewardship of the resources entrusted to it (A).
According to the IASB’s Conceptual Framework, information on which two of the following areas can help users identify the reporting entity’s financial strengths and weaknesses?
A The economic resources it controls B Its financial performance in the past C The demographic structure of the local economy D The entity’s claims (the entity’s liabilities) E Its management structure
Select ONE answer:
A & D
B & C
D & E
A & B
Show your workings to arrive at your answer, and explain and justify your reasons:
This multiple-choice question is suitable for Accounting KS5 classes.
The answer is 1
Correct – A & D – The IASB’s Conceptual Framework states that information about the economic resources (A) and claims (D) of an entity can help users to identify the reporting entity’s financial strengths and weaknesses. That information can then be used to help users to assess the reporting entity’s liquidity and solvency.
According to the IASB’s Conceptual Framework, which qualitative characteristics enhance the usefulness of information that is relevant and faithfully represented?
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