Tag: Topic 1

Listed below are two comments on accounting conventions.

1. According to the lASB’s Conceptual Framework, financial information must be either relevant or faithfully represented if it is to be useful.
2. Materiality means that only items having a physical existence may be recognised as assets.

Which, if either, of these comments is correct?

Select ONE answer:

1. 1 only
2. 2 only
3. Both of them
4. Neither of them

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 4

1. Not correct
2. Not correct
3. Not correct
4. Correct -Information must be both relevant and faithfully represented to be useful and Materiality concerns whether an item in the financial statements can influence users’ decisions; there is no absolute amount that makes an item material.

This work is licensed under a Creative Commons Attribution 4.0 International License.