SOLUTIONS

1. C is correct. Financial statements provide information, including information about the entity's financial position, performance, and changes in financial position, to users. They do not typically provide information about users.
2. B is correct. The IASB is currently charged with developing International Financial Reporting Standards.
3. B is correct. The FASB is responsible for the Accounting Standards Codification™, the single source of non-governmental authoritative US generally accepted accounting principles.
4. B is correct. Accounting standards boards should be guided by a well articulated framework. They should be independent; and while they consider input from stakeholders, the process should not be compromised by pressure from external forces, including political pressure. Accounting standards boards should have adequate resources.
5. C is correct. A core objective of IOSCO is to ensure that markets are fair, efficient, and transparent. The other core objectives are to reduce, not eliminate, systematic risk and to protect investors, not all users of financial statements.
6. A is correct. Accuracy is not an enhancing qualitative characteristic. Faithful representation, not accuracy, is a fundamental qualitative characteristic.
7. A is correct. Understandability is an enhancing qualitative characteristic of financial information—not a constraint.
8. C is correct. The Conceptual Framework (2010) identifies two important underlying assumptions of financial statements: accrual basis and going concern. Going concern is the assumption that the entity will continue to operate for the foreseeable future. Enterprises with the intent to liquidate or materially curtail operations would require different information for a fair presentation.
9. B is correct. Accrual basis reflects the effects of transactions and other events being recognized when they occur, not when the cash flows. These effects are recorded and reported in the financial statements of the periods to which they relate.
10. C is correct. The fundamental qualitative characteristic of faithful representation is contributed to by completeness, neutrality, and freedom from error.
11. B is correct. Historical cost is the consideration paid to acquire an asset.
12. C is correct. The amount that would be received in an orderly disposal is realizable value.
13. B is correct. There is no statement of changes in income. Under IAS No. 1, a complete set of financial statements includes a statement of financial position, a statement of comprehensive income, a statement of changes in equity, a statement of cash flows, and notes comprising a summary of significant accounting policies and other explanatory information.
14. B is correct. The elements of financial statements related to the measure of performance are income and expenses.
15. A is correct. The elements of financial statements related to the measurement of financial position are assets, liabilities, and equity.
16. A is correct. Timeliness is not a characteristic of a coherent financial reporting framework. Consistency, transparency, and comprehensiveness are characteristics of a coherent financial reporting framework.
17. B is correct. Rules-based, principles-based, and objectives-oriented approaches are recognized approaches to standard-setting.
18. A is correct. A discussion of the impact would be the most meaningful, although B would also be useful.