International Accounting Standards Board (IASB) developed a conceptual framework as a coherent system of interrelated objectives and fundamentals that can lead to consistent rules and that prescribes the nature, function, and limits of financial accounting and financial statements. It consists of three levels; the first level identifies the objectives of financial reporting. In the second level, the qualitative characteristics and elements. The third level determines recognition, measurement and disclosure concepts. The characteristics or qualities of information discussed in the Conceptual Framework are the concepts that make information useful and the qualities to be sought when accounting choices are made. The qualitative characteristics can be distinguished as fundamental or enhancing characteristics, depending on how they affect the usefulness of information.

REQUIRED:

a-What are the objectives of financial reporting based on conceptual framework classification

b-

Based on the conceptual framework, explain which the accounting assumption, principle, qualitative characteristic, or constraint is violated in the following scenarios:

1-Changing the inventory valuation method from period to period.

2-Insurance paid in advance is not recorded as prepaid insurance.

3-Intangible Asset such as a patent is not capitalized and treated as period expenses.

4-Assuming that Ringgit today will not buy as much as ten years ago.

5-All payments less than RM 1000 are expensed as incurred.

6-company does not prepare its financial statement each year.

7-company ignores all events post-statement of financial position and not report them although some of these events are significant.

8-Company doesnt segregate between the owner personal transactions and business transactions.

c- The qualitative characteristics can be distinguished as fundamental or enhancing characteristics, briefly explain ONE of Fundamental Qualities WITH EXAMPLE and ONE of Enhancing Qualities WITH EXAMPLE?