ACCA Applied Knowledge (BT, MA, FA) · Financial Accounting (FA)

Conceptual framework and accounting concepts

14 practice questions, each with the answer and an explanation.

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All 14 questions

  1. Under the IASB Conceptual Framework, which two characteristics are the fundamental qualitative characteristics of useful financial information?
  2. Information is described as 'capable of making a difference to the decisions made by users'. Which qualitative characteristic is this?
  3. A company records its machinery at the price it paid and does not adjust the figure each year for increases in market value. Which concept or measurement basis is this?
  4. A business has bought a motor vehicle for use in the business for five years. It does not record the vehicle at its scrap value on the basis that it is not going to be sold. Which concept supports thi…
  5. A business receives cash in January for goods it delivers in March. In which period should the revenue be recognised under the accruals concept (IFRS 15)?
  6. Which of the following is an example of a transaction that is NOT an expense according to the definition in the Conceptual Framework?
  7. Which of the following best defines a liability under the Conceptual Framework?
  8. A business purchases a stapler for £12 and records it as an expense rather than as a non-current asset, even though it will last several years. Which concept justifies this?
  9. A company's statement of financial position shows the amount due from a customer, even though the customer has not yet been invoiced and the company has the contract only. Which element definition is…
  10. Which statement about the prudence concept as now described in the Conceptual Framework is correct?
  11. Which of the following is a feature of an asset that is relevant to its recognition in the statement of financial position?
  12. A business gives a customer 5% trade discount on a list price of £2,000. Which amount is recorded as revenue?
  13. Which of the following correctly describes the 'substance over form' concept?
  14. A retailer records a sale on the day the customer's order is made, although goods will not be delivered until next month. Which fundamental characteristic is most affected by recognising this revenue…

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