True or false, with reasons

Six statements are answered: (i), (ii), (iii), (iv), (vii) and (viii).

(i)False Relevance is a qualitative characteristic of financial statements, together with understandability, reliability and comparability. It is about whether information can influence users' decisions; it is not a quantity.

(ii)True AS 29 recognises a provision only when there is a present obligation from a past event, an outflow is probable, and a reliable estimate of the amount can be made. Without a reliable estimate no provision is recognised; the item is disclosed as a contingent liability instead.

(iii)False A contingent liability is a possible obligation, whose existence will be confirmed only by uncertain future events not wholly within the enterprise's control, or a present obligation that is not recognised because an outflow is not probable or cannot be measured reliably. Contingent items are possible, not always probable.

(iv)False Full, fair and adequate disclosure is the convention of full disclosure. Materiality says that items significant enough to affect users' decisions must be disclosed, while trivial items need not be shown separately.

(vii)False Accounting concepts are the basic assumptions on which accounts are built (business entity, money measurement, going concern and so on), while accounting conventions are customs or traditions that guide their practical application (consistency, conservatism, materiality, full disclosure). Conventions differ from the concepts, which are the postulates of accounting.

(viii)False Prior period items are income or expenses that arise in the current period because of errors or omissions in preparing the financial statements of one or more prior periods. They are not items that arose and were settled in the past.