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hi, Mike
it’s a Q about the underlying assumptions I’m struggling to resolve. actually, there’re several Qs on the topic in the revision mock exam. they all ask to find NOT an underlying assumption behind the preparation of financial statements among some options which differ from time to time. I thought that we have only two assumptions: accruals and going concern, but as I’ve figured out from the given right answers, there are more of them, including (and probably not limited by) off-setting, consistency and materiality. where could I find the whole list, please?
Relevance
Reliability
Matching Concept
Timeliness
Neutrality
Faithful Representation
Prudence
Completeness
Single Economic Entity Concept
Money Measurement Concept
Comparability/Consistency
Understandability
Materiality
Going Concern
Accruals
Business Entity
Substance over Form
Realization Concept
Duality ConceptHere’s a list off the net. Fundamental accounting CONCEPTS may be what you’re looking for?
Prudence, Consistency, Going concern, Materiality, Comparability?
Does either list help?
well, I don’t know exactly what it is, but none of your lists fit to the given answers. I’ll just copy questions from the exam to clear up:
1. Which one of the following is not an underlying assumption behind the preparation of financial statements?
– off-setting
– reliability (correct answer)
– consistency
– materiality2. Which one of the following is not an underlying assumption behind the preparation of financial statements?
– materiality
– accruals
– understandability (correct answer)
– consistency3. Which one of the following is not an underlying assumption behind the preparation of financial statements?
– comparability (correct answer)
– off-setting
– materiality
– going concernactually, I thought it’s you who composes the F7 mock exam questions on this website
Yes, it is me, but when you posted your question, I rushed off to the internet to see what came up from that.
I’ll need to check the source of that internet extract.
According to the course notes, the 5 underlying assumptions are “Accruals, Going Concern, Consistency, Materiality and Off-setting”
I was too distracted at the time of my initial response to open the course notes on the net and don’t have them hard-copy ready to hand, so took an inexcusable short cut
Work on the list of five that I’ve just given you.
Why did I not know them off the top of my head? Because it’s many years since I taught those 5! It’s a chapter that the students get to work through for themselves
I’ll try not to be so carefree in future
Incidentally, when I learned them many years ago, prudence was THE fundamental accounting concept but was removed and replaced by off-setting
If two concepts were in conflict, prudence prevailed!
>>It’s a chapter that the students get to work through for themselves
but I did! I’ve just seen my notes there on the lecture notes. but it’s just a bit difficult topic for my understanding – the framework – so I decided to listen to your lecture on it on the P2 a couples of days ago, just to absorb the information through my hearing as well. and there were only two assumptions explained there, as I said, going concern and accruals. I don’t know how critical it is for the P2 candidates, probably I shouldn’t have listened to the lecture beforehand, but observing any topic from different points helps me a lot. besides, I like to listen to you explanation and reasoning while studying any substance 🙂I think, after I’ve heard the lecture my memory was overwritten with new information and I completely forgot what I’ve studied previously all by myself. but as a reward, now all nine… oh my goodness, ten qualitative characteristics are firmly planted into my mind with your helpful technique 🙂
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