Question

According to the IASB Conceptual framework which of the following is not an objective of financial statements?
Select one:
a. Enabling users to assess the performance of management to aid decision-making
b. Providing information regarding the performance of a business
c. Providing information regarding the financial position of a business
d. Helping to assess the going concern status of a business

Answer 1

Answer:

The Framework's purpose is to assist the IASB in developing and revising IFRSs that are based on consistent concepts, to help preparers to develop consistent accounting policies for areas that are not covered by a standard or where there is choice of accounting policy, and to assist all parties to understand and interpret IFRS. [SP1.1]

In the absence of a Standard or an Interpretation that specifically applies to a transaction, management must use its judgement in developing and applying an accounting policy that results in information that is relevant and reliable. In making that judgement, IAS 8.11 requires management to consider the definitions, recognition criteria, and measurement concepts for assets, liabilities, income, and expenses in the Framework. This elevation of the importance of the Framework was added in the 2003 revisions to IAS 8.

The Framework is not a Standard and does not override any specific IFRS. [SP1.2]

If the IASB decides to issue a new or revised pronouncement that is in conflict with the Framework, the IASB must highlight the fact and explain the reasons for the departure in the basis

Answer 2

According to the IASB Conceptual framework which of the following is not an objective of financial statements is - Helping to assess the going concern status of a business (option d).

Financial reporting's goal is to "present information on the financial status, performance, and changes in financial position of an enterprise that is relevant to a wide variety of users in making economic decisions," according to the International Accounting Standard Board (IASB).

Objectives of financial statements according to IASB conceptual framework:

Giving management of a company information that is utilized for planning, analysis, benchmarking, and decision-making.

Giving investors, promoters, debt providers, and creditors information that enables them to make thoughtful judgments about investments, credit, etc.

Providing details on many areas of an organization to shareholders and the general public in the case of listed firms.

Giving details on an organization's financial resources, claims against those resources (liabilities and owner equity), and how these resources and claims have changed over time.

Describing the methods a company uses to acquire and use different resources.

Get information to different stakeholders on performance management of an organization, including how scrupulously and morally they are carrying out their fiduciary duties and responsibilities

Supplying data to the statutory auditors, which streamlines the audit.

Improving social welfare by taking the interests of the government, unions, and workers into consideration.

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