Test Singh
asked about 1 year ago
Discuss the advantages and disadvantages of historical cost accounting.
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puru_test
answered about 1 year ago
| A | THE CONCEPTUAL AND REGULATORY | e) | Discuss whether the use of current value |
| FRAMEWORK FOR FINANCIAL REPORTING | accounting overcomes the problems of | ||
| historical cost accounting. | |||
| 1. | The need for a conceptual framework and the | ||
| characteristics of useful information | f) | Describe the concept of financial and physical | |
| capital maintenance and how this affects the | |||
| a) | Describe what is meant by a conceptual framework for financial reporting. | determination of profits. | |
| 3. | Regulatory framework | ||
| b) | Discuss whether a conceptual framework is | ||
| necessary and what an alternative system | a) | Explain why a regulatory framework is needed | |
| might be. | including the advantages and disadvantages of | ||
| IFRS over a national regulatory framework. | |||
| c) | Discuss what is meant by relevance and | ||
| faithful representation and describe the | b) | Explain why accounting standards on their own | |
| qualities that enhance these characteristics. | are not a complete regulatory framework. | ||
| d) | Discuss whether faithful representation | c) | Distinguish between a principles based and a |
| constitutes more than compliance with | rules based framework and discuss whether | ||
| accounting standards. | they can be complementary. | ||
| e) | Discuss what is meant by understandability | d) | Describe the IASB’s Standard setting process |
| and verifiability in relation to the provision of | including revisions to and interpretations of | ||
| financial information. | Standards. | ||
| f) | Discuss the importance of comparability and | e) | Explain the relationship of national standard |
| timeliness to users of financial statements. | setters to the IASB in respect of the standard | ||
| setting process. | |||
| g) | Discuss the principle of comparability in | ||
| accounting for changes in accounting | 4. | The concepts and principles of groups and | |
| policies. | consolidated financial statements | ||
| 2. | Recognition and measurement | a) | Describe the concept of a group as a single |
| economic unit. | |||
| a) | Define what is meant by ‘recognition’ in | ||
| financial statements and discuss the | b) | Explain and apply the definition of a subsidiary | |
| recognition criteria. | within relevant accounting standards. | ||
| b) | Apply the recognition criteria to: | c) | Using accounting standards and other |
| i) assets and liabilities. | regulation, identify and outline the | ||
| ii) income and expenses. | circumstances in which a group is required to | ||
| prepare consolidated financial statements. | |||
| c) | Explain and compute amounts using the | ||
| following measures : | d) | Describe the circumstances when a group may | |
| i) historical cost | claim exemption from the preparation of | ||
| ii) current cost | consolidated financial statements. | ||
| iii) net realisable value | |||
| iv) present value of future cash flows | e) | Explain why directors may not wish to | |
| v) fair value | consolidate a subsidiary and when this is | ||
| permitted by accounting standards and other | |||
| applicable regulation. |
