ICAEW AF · Chapter 1 · Question 3 of 11
How does the IFRS Conceptual Framework define an asset?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) A present economic resource controlled by the entity as a result of past events
Explanation
The Conceptual Framework defines an asset as a present economic resource controlled by the entity as a result of past events, and an economic resource is a right that has the potential to produce economic benefits. Benefits do not need to be certain, and legal ownership is not required because the test is control. The last definition is the definition of a liability.
More Accounting concepts, the Conceptual Framework and regulation MCQs
- Q5Which of the following best describes the accrual basis of accounting?
- Q6According to the IFRS Conceptual Framework, when is information material?
- Q7Which body is responsible for developing and issuing IFRS Accounting Standards?
- Q8In which circumstances does IAS 1 Presentation of Financial Statements allow an entity to depart from a requirement of an IFRS?
- Q9A business buys inventory on credit for £7,500. What is the effect of this transaction on the accounting equation?