Prudence – Knowsia

IA – JULY 2020 – L1 – Q2 – Accounting Concepts Violations and Working Capital

Identify violated accounting concepts in scenarios and explain; define working capital and explain four factors determining its requirements.

Question

Answer at least ONE question from this section

a. A number of accounting reporting situations are described below.

In preparing its financial statements, GROUP NDOMIE omitted information about an ongoing lawsuit which its lawyers advised that the company could very well lose when it gets to court.
RECEIVERSHIP COMPANY believes its people are its most significant asset. It estimates and records their value on its Balance Sheet.
SME LIMITED is carrying stock at its current market value of GHS100,000. The stock had an original cost of GHS75,000.
BREW CORPORATION is in its fifth year of operations and has yet to issue financial statements.
Nana Appah, President of A1-GOLD COMPANY LIMITED bought a computer for his personal use. He paid for the computer with company funds and recorded it in the Computers’ account.

You are required: For each of the above situations, indicate the concept or convention that has been violated, and explain why the situation described violates this assumption or principle.

Define the term “working capital”.
State and explain any four (4) factors which determine the Working Capital requirements of a business enterprise.

Total Marks – 20

Answer

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Tags: Concept Violations, Entity, Factors, Prudence, Working Capital Definition
Level: Level 1

Topic: Importance of working capital/liquidity
Series: JULY 2020

CR – Nov 2021 – L3 – Q7 – Introduction to Corporate Reporting

Evaluate prudence reintroduction, revised asset and liability definitions in the Conceptual Framework.

Question

The Conceptual Framework 2010 was criticized for its lack of clarity, the exclusion of certain important concepts, and for being outdated in terms of the IASB’s current thinking. The revised Conceptual Framework 2018 includes some new concepts such as prudence, provides updated definitions and recognition criteria for assets and liabilities, and clarifies some important concepts in a well-arranged eight chapters. Chapter four of the revised Conceptual Framework 2018 on elements of financial statements redefined some basic elements and concepts.

Required:

a. Evaluate the arguments for and against re-introduction of prudence into the Conceptual Framework.
(7 Marks)

b. Identify TWO of the concepts (Asset and Liability) which definitions were revised and justify the reasons for revised definitions.
(8 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Asset Definition, Conceptual Framework, Financial Reporting Integrity, Liability Definition, Prudence
Level: Level 3

Topic: Introduction to Corporate Reporting

FA – May 2012 – L1 – SA – Q28 – Accounting for Inventories (IAS 2)

Identifying the accounting concept that guides the treatment of known losses and inventory valuation.

Question

Borox Limited makes provision for all known losses and values its inventories at the lower of cost and net realizable value. Which accounting concept is the company complying with?

Answer

Find Related Questions by Tags, levels, etc.

Tags: IAS 2, Inventory, Prudence, Valuation
Level: Level 1

Topic: Accounting for Inventories (IAS 2)
Series: MAY 2012

FA – May 2021 – L1 – SB – Q1a – Accounting Concepts

Explanation of seven fundamental accounting concepts used in financial statement preparation.

Question

Briefly explain the following fundamental accounting concepts used in the preparation of financial statements in accordance with IAS 1 – Presentation of financial statement:

i. Going concern (2 Marks)
ii. Consistency of presentation (2 Marks)
iii. Accrual (2 Marks)
iv. Fair presentation (2 Marks)
v. Substance over form (2 Marks)
vi. Prudence (2 Marks)
vii. Materiality (2 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accrual, Consistency, Fair Presentation, Going Concern, Materiality, Prudence, Substance Over Form
Level: Level 1

Topic: Accounting Concepts
Series: MAY 2021

FA – May 2021 – L1 – SA – Q2 – Accounting Concepts

Identifies the principle applied when inventory is recognized at net realizable value.

Question

Inventories are recognised at the net realisable value when this is lower than the cost price in order to satisfy the ……….. principle.

A. Matching
B. Prudence
C. Accrual
D. Periodicity
E. Realisation

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accounting principles, Financial Reporting, Inventory, Prudence
Level: Level 1

Topic: Accounting Concepts
Series: MAY 2021

IA – JULY 2020 – L1 – Q2 – Accounting Concepts Violations and Working Capital

Identify violated accounting concepts in scenarios and explain; define working capital and explain four factors determining its requirements.

Question

Answer at least ONE question from this section

a. A number of accounting reporting situations are described below.

In preparing its financial statements, GROUP NDOMIE omitted information about an ongoing lawsuit which its lawyers advised that the company could very well lose when it gets to court.
RECEIVERSHIP COMPANY believes its people are its most significant asset. It estimates and records their value on its Balance Sheet.
SME LIMITED is carrying stock at its current market value of GHS100,000. The stock had an original cost of GHS75,000.
BREW CORPORATION is in its fifth year of operations and has yet to issue financial statements.
Nana Appah, President of A1-GOLD COMPANY LIMITED bought a computer for his personal use. He paid for the computer with company funds and recorded it in the Computers’ account.

You are required: For each of the above situations, indicate the concept or convention that has been violated, and explain why the situation described violates this assumption or principle.

Define the term “working capital”.
State and explain any four (4) factors which determine the Working Capital requirements of a business enterprise.

Total Marks – 20

Answer

Find Related Questions by Tags, levels, etc.

Tags: Concept Violations, Entity, Factors, Prudence, Working Capital Definition
Level: Level 1

Topic: Importance of working capital/liquidity
Series: JULY 2020

CR – Nov 2021 – L3 – Q7 – Introduction to Corporate Reporting

Evaluate prudence reintroduction, revised asset and liability definitions in the Conceptual Framework.

Question

Required:

a. Evaluate the arguments for and against re-introduction of prudence into the Conceptual Framework.
(7 Marks)

b. Identify TWO of the concepts (Asset and Liability) which definitions were revised and justify the reasons for revised definitions.
(8 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Asset Definition, Conceptual Framework, Financial Reporting Integrity, Liability Definition, Prudence
Level: Level 3

Topic: Introduction to Corporate Reporting

FA – May 2012 – L1 – SA – Q28 – Accounting for Inventories (IAS 2)

Identifying the accounting concept that guides the treatment of known losses and inventory valuation.

Question

Borox Limited makes provision for all known losses and values its inventories at the lower of cost and net realizable value. Which accounting concept is the company complying with?

Answer

Find Related Questions by Tags, levels, etc.

Tags: IAS 2, Inventory, Prudence, Valuation
Level: Level 1

Topic: Accounting for Inventories (IAS 2)
Series: MAY 2012

FA – May 2021 – L1 – SB – Q1a – Accounting Concepts

Explanation of seven fundamental accounting concepts used in financial statement preparation.

Question

Briefly explain the following fundamental accounting concepts used in the preparation of financial statements in accordance with IAS 1 – Presentation of financial statement:

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accrual, Consistency, Fair Presentation, Going Concern, Materiality, Prudence, Substance Over Form
Level: Level 1

Topic: Accounting Concepts
Series: MAY 2021

FA – May 2021 – L1 – SA – Q2 – Accounting Concepts

Identifies the principle applied when inventory is recognized at net realizable value.

Question

Inventories are recognised at the net realisable value when this is lower than the cost price in order to satisfy the ……….. principle.

A. Matching
B. Prudence
C. Accrual
D. Periodicity
E. Realisation

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accounting principles, Financial Reporting, Inventory, Prudence
Level: Level 1

Topic: Accounting Concepts
Series: MAY 2021

Question Tag: Prudence

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IA – JULY 2020 – L1 – Q2 – Accounting Concepts Violations and Working Capital

Identify violated accounting concepts in scenarios and explain; define working capital and explain four factors determining its requirements.

CR – Nov 2021 – L3 – Q7 – Introduction to Corporate Reporting

Evaluate prudence reintroduction, revised asset and liability definitions in the Conceptual Framework.

FA – May 2012 – L1 – SA – Q28 – Accounting for Inventories (IAS 2)

Identifying the accounting concept that guides the treatment of known losses and inventory valuation.

FA – May 2021 – L1 – SB – Q1a – Accounting Concepts

Explanation of seven fundamental accounting concepts used in financial statement preparation.

FA – May 2021 – L1 – SA – Q2 – Accounting Concepts

Identifies the principle applied when inventory is recognized at net realizable value.

IA – JULY 2020 – L1 – Q2 – Accounting Concepts Violations and Working Capital

Identify violated accounting concepts in scenarios and explain; define working capital and explain four factors determining its requirements.

CR – Nov 2021 – L3 – Q7 – Introduction to Corporate Reporting

Evaluate prudence reintroduction, revised asset and liability definitions in the Conceptual Framework.

FA – May 2012 – L1 – SA – Q28 – Accounting for Inventories (IAS 2)

Identifying the accounting concept that guides the treatment of known losses and inventory valuation.

FA – May 2021 – L1 – SB – Q1a – Accounting Concepts

Explanation of seven fundamental accounting concepts used in financial statement preparation.

FA – May 2021 – L1 – SA – Q2 – Accounting Concepts

Identifies the principle applied when inventory is recognized at net realizable value.

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IA – JULY 2020 – L1 – Q2 – Accounting Concepts Violations and Working Capital

Identify violated accounting concepts in scenarios and explain; define working capital and explain four factors determining its requirements.

You're reporting an error for "IA – JULY 2020 – L1 – Q2 – Accounting Concepts Violations and Working Capital"

CR – Nov 2021 – L3 – Q7 – Introduction to Corporate Reporting

Evaluate prudence reintroduction, revised asset and liability definitions in the Conceptual Framework.

You're reporting an error for "CR – Nov 2021 – L3 – Q7 – Introduction to Corporate Reporting"

FA – May 2012 – L1 – SA – Q28 – Accounting for Inventories (IAS 2)

Identifying the accounting concept that guides the treatment of known losses and inventory valuation.

You're reporting an error for "FA – May 2012 – L1 – SA – Q28 – Accounting for Inventories (IAS 2)"

FA – May 2021 – L1 – SB – Q1a – Accounting Concepts

Explanation of seven fundamental accounting concepts used in financial statement preparation.

You're reporting an error for "FA – May 2021 – L1 – SB – Q1a – Accounting Concepts"

FA – May 2021 – L1 – SA – Q2 – Accounting Concepts

Identifies the principle applied when inventory is recognized at net realizable value.

You're reporting an error for "FA – May 2021 – L1 – SA – Q2 – Accounting Concepts"

IA – JULY 2020 – L1 – Q2 – Accounting Concepts Violations and Working Capital

Identify violated accounting concepts in scenarios and explain; define working capital and explain four factors determining its requirements.

You're reporting an error for "IA – JULY 2020 – L1 – Q2 – Accounting Concepts Violations and Working Capital"

CR – Nov 2021 – L3 – Q7 – Introduction to Corporate Reporting

Evaluate prudence reintroduction, revised asset and liability definitions in the Conceptual Framework.

You're reporting an error for "CR – Nov 2021 – L3 – Q7 – Introduction to Corporate Reporting"

FA – May 2012 – L1 – SA – Q28 – Accounting for Inventories (IAS 2)

Identifying the accounting concept that guides the treatment of known losses and inventory valuation.

You're reporting an error for "FA – May 2012 – L1 – SA – Q28 – Accounting for Inventories (IAS 2)"

FA – May 2021 – L1 – SB – Q1a – Accounting Concepts

Explanation of seven fundamental accounting concepts used in financial statement preparation.

You're reporting an error for "FA – May 2021 – L1 – SB – Q1a – Accounting Concepts"

FA – May 2021 – L1 – SA – Q2 – Accounting Concepts

Identifies the principle applied when inventory is recognized at net realizable value.

You're reporting an error for "FA – May 2021 – L1 – SA – Q2 – Accounting Concepts"

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