FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 3: The New Zealand Framework

Show Answer

Share

---

All types

Filters

Study Flashcards

Question 1

Essay

Review LaterAdd Note

Review Later

It is vital that financial statements can be relied on.What steps would you recommend an organisation takes to ensure that the information in its financial statements achieves this?

Correct Answer

verified

Accounting information must faithfully represent all material events and transactions during the reporting period based on economic reality and not merely their legal form.It must be free from any bias (be neutral),be complete and as appropriate be conservative in nature (prudent)rather than optimistic. Possible steps could include: • More detailed disclosures in financial statements than what is required by accounting standards. • Identifying in the financial statements the more subjective aspects of the reported information. • If not already required,having the financial statements audited.

Question 2

Essay

Review LaterAdd Note

Review Later

The NZ Framework serves four main functions in supporting the presentation of a true and fair view in financial reporting - interpretation,benchmarking,audit and philosophical.Discuss how the NZ Framework works in each of these functions.

Correct Answer

verified

Interpretation - the NZ Framework sets o...

View Answer

Show Answer

Question 3

Essay

Review LaterAdd Note

There are 3 main points to the NZ Framework definitions of an asset.Apply those 3 main points to each of the following scenarios,and determine whether an asset should be recognised and recorded in the Balance Sheet. a A firm is involved in a court case in which it is suing a competitor for $100,000 for copying its product and trademark.The court case has not yet been decided. b A firm has signed a contract of purchase for 2 tonnes of bananas in Ecuador,and also has an insurance contract for loss of sales and profits if the bananas are damaged,lost or held back in any way from the voyage to New Zealand. c A firm has just signed a world-famous New Zealand netballer to work for them in a marketing position.The netballer's international contacts and high profile are expected to win the firm several lucrative contracts.The contract of employment may be terminated by either party,provided written notice is given 2 weeks in advance of the termination date.

Briefly contrast cash accounting with accrual accounting,in terms of the types of transactions that are recorded under each system.Which is the most objective system?

Briefly explain the purpose and function of Accounting Standards,distinguishing between an IFRS and an NZ IFRS.

Explain the 'monetary assumption',the 'going concern assumption' and the 'accounting period assumption',giving an example for each assumption in the financial statements.

Match the assumption/principle in column 1 with the best explanation or illustration in column 2.

In a company that you work for,a building which cost $150,000 ten years ago now has a market value of $400,000.For financial statement purposes,what arguments would you put forward to convince your Chief Executive Officer that this building should be shown in the financial reports at its current market value?

Match the assumption/principle in column 1 with the best illustration of an implication in column 2.

Match the assumption/principle in column 1 with the best illustration of an implication in column 2.

Explain the term 'period reporting'.Why is this concept important?

How does the Statement of Accounting Policies and its required content fulfil the 'concept of comparability'?

Distinguish between 'general purpose' and 'special purpose' financial statements and outline the significance of this distinction.

According to the NZ Framework,it is appropriate to use multiple measurement bases.What does this mean,and what disclosure must be made?