/*! This file is auto-generated */ .wp-block-button__link{color:#fff;background-color:#32373c;border-radius:9999px;box-shadow:none;text-decoration:none;padding:calc(.667em + 2px) calc(1.333em + 2px);font-size:1.125em}.wp-block-file__button{background:#32373c;color:#fff;text-decoration:none} Q.2-11FRS Question: What two assumptions a... [FREE SOLUTION] | 91影视

91影视

Log out

Learning Materials

Features

Discover

Chapter 2: Q.2-11FRS (page 76)

Question: What two assumptions are central to the IASB conceptual framework?

Short Answer

Expert verified

Answer

Accrual basis and going concern are the two assumptions.

Step by step solution

01

Meaning of IASB

TheIASB stands for International Accounting Standards Board.It is an independent body set up under theInternational Financial Reporting Standards (IFRS) Foundation and is involved in thestandard-setting process.

02

The two assumptions underlying the conceptual framework of IASB are:

Accrual basis of accounting: The accrual concept of accounting means that a transaction should be recorded when it is entered into and not when the actual settlement takes place. For e.g., interest income earned in 2021 but received in 2022 should be recorded in the books of accounts in the financial year 2021.

Going concern assumption: Going concern means that an entity is formed to continue its business for the foreseeable future and will not cease its operations. Because of this assumption, the fixed assets are depreciated over the periods instead of being expensed off in the year of acquisition.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91影视!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

What accounting assumption, principle, or constraint would Target Corporation use in each of the situations below?

(a) Target was involved in litigation over the last year. This litigation is disclosed in the financial statements.

(b) Target allocates the cost of its depreciable assets over the life it expects to receive revenue from these assets.

(c) Target records the purchase of a new Dell PC at its cash equivalent price.

Describe the basic assumptions of accounting.

Question: BE2-5 (L03) Presented below are three different transactions related to materiality. Explain whether you would classify these transactions as material.(

a) Blair Co. has reported a positive trend in earnings over the last 3 years. In the current year, it reduces its bad debt allowance to ensure another positive earnings year. The impact of this adjustment is equal to 3% of net income.

(b) Hindi Co. has an unusual gain of \(3.1 million on the sale of plant assets and a \)3.3 million loss on the sale of investments. It decides to net the gain and loss because the net effect is considered immaterial. Hindi Co.'s income for the current year was \(10 million.

(c) Damon Co. expenses all capital equipment under \)25,000 on the basis that it is immaterial. The company has followed this practice for a number of years.

What are the four basic assumptions that underlie the financial accounting structure?

Question: What are some of the differences in elements in the IASB and FASB conceptual frameworks?
See all solutions

Recommended explanations on Business Studies Textbooks

Accounting

Read Explanation

Sales in Business

Read Explanation

Startups

Read Explanation

Organizational Communication

Read Explanation

Intermediate Accounting

Read Explanation

Human 91影视

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.