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QUESTION TWO Accounting practice depends upon the guidance provided by a number of accounting concepts, some of which are to be found in IAS 1 and/or in the conceptional framework of the International Accounting Standards Committee

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QUESTION TWO

Accounting practice depends upon the guidance provided by a number of accounting concepts, some of which are to be found in IAS 1 and/or in the conceptional framework of the International Accounting Standards Committee.

Required:

(a)     Define and explain the relevance of the following accounting concepts.

• Neutrality
• Money measurement
• Accruals
• Substance over form
• Consistency                                                                                                  

(b)     Give two examples of situations in which there is a clash or inconsistency between two accounting concepts or conventions, and explain how the inconsistency should be resolved. (In answering this part of the question, you need not confine yourself to considering the concepts listed in part (a))