Financial Statements IASB Quiz

"Going Concern Basis" is an underlying assumption of financial statements.

Using the accrual basis underlying assumption, the effects of transactions and other events are recognised when the cash is received or paid not when they occur.

Relevant information is capable of making a difference in the decisions made by users. Relevance requires financial information to be related to what?

The financial information in the financial reports should represent what it purports to represent. Meaning, it should show what really are present and what really happened..

There are four possible measurement bases for assets: historical cost, current cost, present value and which other?

DEFINITION of 'Historical Cost' A measure of value used in accounting in which the price of an [blank_start]asset[blank_end] on the balance sheet is based on its [blank_start]nominal[blank_end] or [blank_start]original[blank_end] cost when acquired by the company.

A method of accounting in which assets are valued on the basis of their current replacement cost, and increases in their [blank_start]value[blank_end] as a result of inflation are excluded from calculations of profit.

With regards to inventory, net realisable value (NRV) is the estimated selling price in the ordinary course of business minus any cost to complete and to sell the goods. NRV is one of the amounts considered when determining the lower of cost or market for items in inventory...

The current worth of a future sum of money or stream of cash flows given a specified rate of return. Future cash flows are discounted at the discount rate, and the higher the discount rate, the lower the [blank_start]present value[blank_end] of the future cash flows.

What does IASB stand for in the IASB Conceptual Framework?

A method of accounting in which asset are valued on the basis of their current replacement cost.

Historical cost is a method of accounting in which assets are valued at their original cost

What is the formula for calculating Net Realisable Value (NRV)?