TRUE OR FALSE

1. A statement of profit or loss that uses the function of expense method classifies expenses by their nature while a statement of profit or loss that uses the nature of expense method classifies expenses by their function within the company.

2. A complete set of Financial Statement includes statement of financial position as at the beginning of the preceding period when an entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial statements.

3. General purpose financial statements are those intended to meet the needs of users who are in a position to require an entity to prepare reports tailored to their particular information needs.

4. The Accounting Standards Council (ASC) is the successor of the Financial Reporting Standards Council (FRSC).

5. The Norwalk Agreement is a memorandum of agreement made between IASB and FASB (US) with the goal of achieving comparability in financial reporting standards by eliminating or minimizing differences between IFRS and US GAAP.

6. The IFRS Foundation is an independent, privately organized, not-for-profit organization, operating to serve the vested interest. The governance and due process are designed to keep the standard-setting independent from special interests while ensuring accountability to our stakeholders around the world.

7. IFRS Standards contribute to economic efficiency by helping investors to identify opportunities and risks across the world, thus improving capital allocation. Use of a single, trusted accounting language lowers the cost of capital and reduces international reporting costs for businesses.

8. Classification is applied to the unit of account selected for an asset or liability. However, it may sometimes appropriate to separate an asset or liability into components that have different characteristics and to classify those components separately. That would be appropriate when classifying those components separately would enhance the usefulness of the resulting financial information.

9. Only items that meet the definition of an asset, a liability or equity are recognised in the statement of financial position. Similarly, only items that meet the definition of income or expenses are recognised in the statement(s) of financial performance. Thus, all items that meet the definition of one of those elements are recognised.

10. Although an economic resource derives its value from its present potential to produce future economic benefits, the economic resource is the future right that contains that potential, not the present economic benefits that the right may produce.