Conceptual Framework Possible Questions

Question 1

Objective of Financial Reporting in Accordance with the Conceptual Framework

  • Objective of Financial Reporting is to provide Financial Information about an entity that is useful to existing and potential investors, lenders and other creditors in making decisions about providing resources to the entity.

For Information to be considered Useful by Users in making decisions what should that
information be about?

  • For information to be considered useful by users in making decisions, it should be about the entity's financial performance, financial position,and cash flows
  • The entity’s economic resources, claims against the entity and changes in those resources and claims
  • How efficiently and effectively management has discharged its responsibilities to use the entity’s economic resources.

Question 2

What is the role of a junior accountant in the financial reporting team of NSFAS?

The role of a junior accountant in the financial reporting team of NSFAS is

Ensure compliance with accounting standards and regulations

Help analyze financial data for decision-making purposes

To assist with the preparation of financial statements and reports,

What is the Purpose of the 2018 Conceptual Framework?

The Purpose of the 2018 Conceptual Framework is to Provide Guidance on the Concepts and Principles that underpin Financial Reporting

The qualitative characteristics of useful financial information

And the Definition, Recognition, Measurement and Disclosure of Elements of Financial Statements.

Including the Objective of Financial Reporting

Explain the Relevance of IAS1 Presentation of Financial Statements for the preparation of financial reports

IAS1 Presentation of Financial Statements provides guidance on the preparation and presentation of financial statements, including

The Format and Structure of Financial Statements

The Required Disclosures.

The Minimum Content of Financial Statements,

Question 3

What are some of the key financial indicators that investors, lenders and other creditors may use to evaluate an entity's financial performance and position?

Leverage Ratios

Efficiency Ratios

Liquidity Ratios

Profitability Ratios

Such as the current ratio and quick ratio can help users assess the entity's ability to meet its Short-Term Obligations

Such as Return on Assets and Return on Equity can help users assess the entity's ability to generate profits from its Asset

How can an entity's financial policies impact its resources, obligations and performance? Provide examples

An entity's financial policies can impact its resources, obligations, and performance in various ways

Conservative revenue recognition policy may appear less profitable in the short term

Debt management policies can impact an entity's financial position and performance

Conservative revenue recognition policy may lead to greater long-term stability and sustainability

Investment policies can impact an entity's financial position and performance

Aggressive revenue recognition policy may lead to future financial difficulties if revenue is not sustainable

Dividend policies can impact an entity's financial position and performance.



Aggressive revenue recognition policy can inflate reported revenue in the short term

Question 4

The key financial indicators that the entity should focus on in the Annual Report

NSFAS should provide a breakdown of its expenses by category, such as:

NSFAS should provide a breakdown of its revenue sources, such as:

Key financial indicators that NSFAS should focus on in the Annual Report include:

Cash flow

Asset and liability balances

Revenue and expenses

Compliance with financial regulations and standards

Donations

Investment income

Government funding

Administration

Operations

Student support

NSFAS should disclose its asset and liability balances to give stakeholders a sense of its financial position