Reference no: EM132951634

Problem 1: Which of the following statements is TRUE in relation to the presentation of the income statement?

a. If an organisation presents its expenses based on the function-of-expenses approach, then expenses will be classified according to their nature.

b. Larger organisations might tend to show more details about specific expenses, whereas smaller organisations tend to aggregate many of their expenses.

c. Allocating costs to functions may require arbitrary allocations and involve considerable judgement.

d. Larger organisations that are required to comply with accounting standards, have no choice about how they present their income statements.

Problem 2: The objective of general purpose financial reporting is to provide useful information to those stakeholders considering providing resources to an entity. To satisfy this objective, the Conceptual Framework identifies a number of qualitative characteristics that financial information should possess. These include:

a. relevance and faithful representation

b. relevance and faithful representation

c. timeliness and understandability

d. all of these choices