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Listed below are some comments on accounting concepts.
1) Financial statements always treat the business as a separate entity.
2) Materiality means that only items having a physical existence may be recognised as assets.
3) Provisions are estimates and therefore can be altered to make the financial results of a business
more attractive to investors.
Which, if any, of these comments is correct, according to the IASB’s Conceptual Framework for
Financial Reporting?
A 1 only
B 2 only
C 3 only
D None of themAnswer-A.
How is first statement correct if Financial Statements are made by Sole-trader or partnership? There statements also considered to deal business as separate entity?It makes no difference whether the business is a company or a sole trader or a partnership. The financial statements are for the business and treat the business as separate from the owner(s).
I state this in the very first chapter of our free lecture notes and in the lectures working through this chapter.
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