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College 2 - Conservatism

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Master IFRS 2 Quiz on College 2 - Conservatism, created by Burak Baharli on 12/05/2019.
Burak Baharli
Quiz by Burak Baharli, updated more than 1 year ago
Burak Baharli
Created by Burak Baharli almost 5 years ago
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Resource summary

Question 1

Question
Wat is de doelstelling van de financiële verslaggeving?
Answer
  • the single objective of financial reporting is providing useful information for valuation decisions
  • Qualitative characteristics serve to operationalise this objective
  • introducing concepts which standard-setters can employ as arguments in the development of new or revised standards

Question 2

Question
What is Decision Usefulness?
Answer
  • Ex-Ante (vooraf) role of accounting information
  • Evaluate the return potential of investment opportunities
  • Evaluate the managers to monitor the use of invested capital
  • Ex-Post role of accounting information

Question 3

Question
Book value = Recognition of (present value of) future dividends according to accounting
Answer
  • True
  • False

Question 4

Question
Market Value= value of future dividends according to investors
Answer
  • True
  • False

Question 5

Question
What are Qualitative Characteristics?
Answer
  • the boundaries of what the standard-setters deem ‘‘appropriate’’ financial reporting
  • procedures to facilitate completion of a particular task
  • Information is capable of making a difference in the decisions made by capital providers

Question 6

Question
Why is it important to operationalise the objective of financial reporting?
Answer
  • the recurrent use of qualitative characteristics in the framing of accounting problems by standard-setters, practitioners and academics
  • Mindsets consist of a collection of judgment criteria and cognitive processes and procedures to facilitate completion of a particular task
  • the boundaries of what the standard-setters deem ‘‘appropriate’’ financial reporting

Question 7

Question
Nolder & Kadous (2018): Professional skepticism can not be conceptualized as both a mindset and an attitude
Answer
  • True
  • False

Question 8

Question
What is Relevance?
Answer
  • Information is capable of making a difference in the decisions made by capital providers
  • Predictive and/or confirmatory value
  • Capable of making a difference whether the users use it or not
  • Only material information is useful
  • Materiality: omission or misstatement would influence the decisions of the users
  • Depiction of an economic phenomenon is complete, neutral and free from material error!
  • Complete if depiction includes all information necessary

Question 9

Question
Which one is description of Faithful Representation?
Answer
  • Depiction of an economic phenomenon is complete, neutral and free from material error!
  • Complete if depiction includes all information necessary
  • Neutral if there is absence of bias to attain a predetermined result
  • Disclose information about the degree of uncertainty that could lead to material errors
  • Information shall be understandable
  • Assume that user has reasonable knowledge
  • Not an excuse not to report on complex issues

Question 10

Question
Which one is description of Understandability?
Answer
  • Information shall be understandable
  • Assume that user has reasonable knowledge
  • Not an excuse not to report on complex issues
  • Information is available to decision makers before it loses its capacity to influence decisions
  • do not equalize differences!
  • Information is available to decision makers

Question 11

Question
Which one is description of Timeliness?
Answer
  • Information is available to decision makers before it loses its capacity to influence decisions
  • It is achieved if different independent observers could reach the same conclusions about the respective economic phenomena
  • Comparisons of different companies

Question 12

Question
Which one is description of Verifiability
Answer
  • Quality of information that helps assure users that information faithfully represents the economic phenomena (werkelijkheid).
  • It is achieved if different independent observers could reach the same conclusions about the respective economic phenomena

Question 13

Question
What is Comparability?
Answer
  • Comparisons over time
  • Comparisons of different companies
  • But: do not equalize differences
  • Assume that user has reasonable knowledge
  • Not an excuse not to report on complex issues

Question 14

Question
What is Stewardship?
Answer
  • Ex-Post (achteraf) role of accounting information
  • Ex-Ante role of accounting information
  • Subset of decision usefulness
  • Evaluate the managers to monitor the use of invested capital
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