1.

1 Purpose

The purpose of the IFRS Conceptual Framework for Financial Reporting (“Conceptual Framework”) is:

 to assist the IASB to develop IFRS Accounting Standards based on consistent concepts;

 to assist preparers to develop consistent accounting policies when no Standard applies or a Standard allows a
choice;

 to assist all parties to understand and interpret the Standards.

The current version of the Conceptual Framework used to develop and amend IFRS Accounting Standards was issued
in 2018.

As most IFRS Accounting Standards currently in issue were developed in line with earlier versions of the Conceptual
Framework, their requirements do not always align exactly with the current Conceptual Framework.

1.2 Principles v Rules

Key Point

A conceptual framework lays down the foundation for Standards.

US GAAP is an example of a rules-based set of regulations (i.e. a rule for every type of transaction). If there is no rule
for a particular transaction, a new rule is prescribed. Most other GAAPs have some form of conceptual framework
similar to the IFRS Conceptual Framework; the UK GAAP framework is a "Statement of Principles".

 Under a principles-based conceptual framework, there are no strict rules but a set of guidelines to assist in
preparing and understanding financial statements.

 A conceptual framework is a relatively new concept in accounting. Before such frameworks existed, there
was nothing to bind together the entire system of financial reporting. Without a conceptual framework,
inconsistencies in accounting practices made it extremely difficult to make comparisons between entities or
even within a single entity over more than one accounting period.

 The alternative to a conceptual framework is a formal set of rules for every transaction. The problem with
such a system is that people will try to circumvent those rules. this is known as "creative accounting" in
financial accounting and reporting.

 Although consistency might be improved by applying a rigid set of rules, the system would require a new rule
for every new transaction. The new rule would be independent of other rules and might conflict with existing
rules for similar transactions.

 Using a conceptual framework allows a degree of flexibility and interpretation by the user but ensures that
the user stays within the bounds of the Conceptual framework.

 The IASB's Framework defines the elements of financial statements and the characteristics that should be
embodied in those financial statements.

1.3 Status

Key Point

The Conceptual Framework is not a Standard. Nothing in it overrides any requirement in a Standard.
1.4 Financial Statements
A set of financial statements includes the following:

 Statement of financial position;

 Statement of profit or loss and other comprehensive income;

 Statement of changes in equity;

 Statement of changes in financial position (e.g. a statement of cash flows);

 Integral notes, other statements and explanatory material.

The following are not included:

 Reports by directors;

 Statements by chairman;

 Discussion and analysis by management and similar items included in a financial or annual report.

1.5 Users and Their Information Needs

Users Information Needs

 Risk and return of investment:

o for decision-making (buy, hold or sell?)

Investors and their advisers o to assess ability to pay dividends.

 Stability and profitability of employers.

 Ability to provide remuneration, retirement benefits and

Employees and their representatives employment opportunities.

Lenders  Whether loans and interest will be paid when due.

Suppliers and other trade payables  Whether amounts owing will be paid when due.

 Continuance – important for long-term involvement with, or

Customers dependence on, the entity.

 Allocation of resources and, therefore, activities of entities.

 Information to regulate activities, determine taxation policies and

Governments and their agencies as the basis for national income and similar statistics.

 Contribution to the local economy, including the number of

employees and the patronage of local suppliers.

 Trends and recent developments in prosperity and range of

Public activities.
 2.1 Objective and Usefulness

General purpose financial reports provide financial information that is useful to existing and potential investors,
lenders and other creditors (the "primary users") in making decisions relating to providing resources to the entity.
Primary users mostly need to rely on published financial information, as they cannot obtain it directly.

Decisions depend on these primary users’ expectations about returns, which depend on their assessment of:

 the amount, timing and uncertainty of future net cash inflows; and

 management’s stewardship of economic resources.

Therefore, users need information about:

 the entity’s economic resources (assets), claims against it (liabilities) and changes in those resources and
claims; and

 how efficiently and effectively the entity’s management and governing board have discharged their
responsibilities to use the entity’s economic resources.

2.2 Limitations

Limitations of general purpose financial reports include the following:

 They cannot meet all the information needs of primary users. Therefore, those users must consider other
sources of information (e.g. economic conditions, political events and industry outlooks).

 IFRS Accounting Standards are developed to meet the information requirements of primary users. Although
other users may find them useful, such financial reports do not specifically aim to meet their needs.

 General purpose financial reports do not purport to show the value of the reporting entity.

 General purpose financial reports are based mainly on estimates, judgments and models.

2.3 Accrual Accounting

Key Point

Financial reporting is based on accrual accounting as this provides a better basis for assessing performance than cash receipts
and payments.

Under accrual accounting, the effects of transactions and other events are:

 recognised when they occur, not as cash is received or paid;

 recorded in the accounting records and reported in the financial statements of the periods they relate to.

Financial statements prepared on the accrual basis inform users of obligations to pay cash in the future and of
resources that represent cash to be received.

The accrual basis gives rise to the "matching" concept – that expenses are recognised based on a direct association
between costs incurred and earning of income.
 2.4 Underlying Assumption of Going Concern

There is only one assumption that underlies the preparation of financial statements: going concern.

Key Point

Going concern assumes that an entity will continue in operation for the foreseeable future. This basis is presumed to apply
unless users of financial statements are told otherwise (i.e. in the notes to the financial statements).

Therefore, there is neither intention nor need to enter liquidation or cease trading.

3.1 Attributes of Useful Information

Key Point

Qualitative characteristics of financial statements are the attributes which make information provided therein useful to
primary users.

 Fundamental qualitative characteristics are:

o Relevance; and

o Faithful representation.

 Enhancing qualitative characteristics are:

o Comparability;

o Verifiability;

o Timeliness; and

o Understandability.

3.2 Fundamental Qualitative Characteristics

For information to be useful it must be relevant and present a faithful representation of economic phenomena (i.e.
resources, claims, transactions and events).

3.2.1 Relevance

Relevance concerns the decision-making needs of users. Relevant financial information is capable of making a
difference in their decisions (even if some users choose to ignore it or are already aware of it from other sources).
Financial information can make a difference if it helps users:

 to evaluate past, present or future events (i.e. predictive value); or

 to confirm or correct their past evaluations (i.e. confirmatory value).

 Predictive and confirmatory values are inter-related (e.g. the same information may confirm a previous prediction
and be used for a future prediction).

Relevance of information is affected by materiality:

 materiality is entity specific and based on nature (e.g. disclosure of earnings per share) or magnitude;

 a uniform quantitative threshold for materiality cannot be specified because it depends on an entity and
particular circumstances.

Definition

Materiality – information is material if its omission or misstatement could influence the decisions that primary users make
based on the financial information about the specific reporting entity.

3.2.2 Faithful Representation

Financial information must represent faithfully that which it purports to represent (or could be reasonably expected
to represent).

To faithfully represent the economic phenomena may mean that the financial statements must do more than merely
comply with Standards. A transaction or event outside the scope of all Standards must still be recognised or disclosed
in the financial statements.

A faithful representation of information must be:

 Neutral (i.e. free from bias); this is supported by the exercise of prudence;

 Complete (within bounds of materiality and cost) – an omission can cause the information to be false or
misleading and therefore unreliable; and

 Free from error (i.e. no errors or omissions in the description of phenomena, and the process used to
produce the reported information has been selected and applied with no errors in the process). This
does not (it cannot) mean perfectly accurate (e.g. due to the nature of accounting estimates).

Definition

Prudence – the exercise of caution when making estimates under conditions of uncertainty, such that assets and income are
not overstated and liabilities and expenses are not understated.

Prudence is evident in various requirements of existing IFRS Accounting Standards, for example:

 expected credit losses are recognised in respect of financial assets (IFRS 9);

 assets are tested for impairment, and resulting losses are recognised (IAS 36);

 inventories are measured at the lower of cost and net realisable value (IAS 2);

 provisions are recognised for liabilities even if not certain (IAS 37).

Faithful representation also means presenting the substance (i.e. commercial effect) of an economic phenomenon
rather than its legal form. In most circumstances, substance and legal form are the same; if not, information about
the legal form alone would not faithfully represent the economic substance.

3.3 Enhancing Characteristics

Enhancing characteristics improve the usefulness of financial information.

3.3.1 Comparability

Users need to be able to compare financial statements of:

 an entity through time (“internal” comparability) – to identify trends in financial position and performance;
and

 different entities (“external” comparability) – to evaluate relative financial position, performance and
changes in financial position.

Comparability requires consistent measurement, classification and presentation of the financial effect of like
transactions and other events. For example, consistent measurement means applying the same measurement basis
to initial measurement and subsequent measurement of a class of assets from year to year (as opposed to applying
varying measurement methods to similar assets and changing them every year).

An implication of comparability is that users must be informed of the accounting policies used, any changes in those
policies and the effects of such changes. This is an explicit requirement of IFRS Standards (see IAS 8 in Chapter 4).

Another implication is that financial statements must show corresponding information for preceding periods.

3.3.2 Verifiability

Verifiability means that knowledgeable, independent observers could reach a consensus that a particular
representation has the fundamental quality of faithfulness.

Verification may be:

 direct (e.g. through physical inspection); or

 indirect (e.g. using a model, formula or technique).

Verifiability relates not only to single-point estimates but also to ranges of outcomes and related probabilities.

3.3.3 Timeliness

Information needs to be available in time for users to make decisions. Older information is generally less useful (but
may still be useful in identifying and assessing trends).

3.3.4 Understandability

Financial information should be made understandable through clear and concise classification and presentation.

Users are assumed to have a reasonable knowledge of business and economic activities and accounting and a
willingness to study information with reasonable diligence (i.e. they are expected to have a level of financial
expertise).

Information about complex matters should not be excluded because it may be too difficult for certain users to
understand.

3.4 Cost Constraint

The cost of providing information should not exceed the benefit obtained from it:

 This cost, though initially borne by the reporting entity, is ultimately borne by the users (e.g. through lower
returns on their investment).

 Users also incur costs (e.g. in analysing and interpreting information).

Benefits are most difficult to quantify and assess:

 the better the quality of information, the better decision-making should be;
  confidence in the efficiency of capital markets lowers the cost of capital.

4.1 Terminology

Definitions

Financial statement elements – the broad classes of the financial effects of transactions grouped according to their economic
characteristics.

Asset – a present economic resource controlled by the entity as a result of past events.

Economic resource – a right that has the potential to produce economic benefit.

Key Point

An asset may exist where there is a low likelihood of economic benefits. However, this does not mean it will be recognised. If
it is recognised, the measurement of the asset will reflect this low likelihood.

Definition

Liability – a present obligation to transfer an economic resource as a result of past events.

Key Point

There is no probability criterion for the transfer of economic resources:

 There must simply be the potential for a transfer;

 A low likelihood of transfer may affect the recognition and measurement of a liability.

Definition

Equity – is the residual interest in the entity’s assets after deducting all its liabilities.

As equity is defined in terms of other items in the statement of financial position; it amounts to the "balancing
figure".

Definitions

Income – increases in assets or decreases of liabilities that result in increases in equity other than those relating to
contributions from holders of equity claims.

Expenses – decreases in assets or increases in liabilities that result in decreases in equity other than those relating to
distributions to holders of equity claims.

Key Point

The definitions of an asset and a liability have not been revised throughout IFRS Standards following the revised definitions in
Key Point

the Conceptual Framework (as above). You should note this in particular in IAS 38 (Chapter 11) and IAS 37 (Chapter 15), which
include a probability criterion for recognition.

Example 1 A Transaction and Elements Affected

An entity purchases, on credit, goods for resale.

 A liability is created:

o Present obligation to pay cash to the supplier.

o Past event in purchasing the goods.

 The goods meet the definition of an asset:

o Control over the use of the goods.

o Past event is the purchasing of the goods.

The goods are then sold for cash.

 Cost of sale (an expense) is recognised as there has been a decrease in inventory assets.

 Income in the form of revenue is recognised from the sale of goods.

 Assets have increased in the form of the receipt of cash.

4.2 Recognition and Derecognition

4.2.1 Meaning of Recognition

Definition

Recognition – the process of capturing for inclusion in the statement of financial position or statement of financial
performance an item which meets the definition of an element.

Recognition involves:

 the depiction of the item in words and by a monetary amount (i.e. “money measurement concept”); and

 the inclusion of that amount in one or more totals in that statement.

Only items that meet the definition of an element may be recognised. However not all items that do meet these
definitions are recognised.

Key Point

Inappropriate recognition can never be rectified by disclosure of the accounting policies used nor by notes or explanatory
material.
 4.2.2 Recognition Criteria

An asset or liability is recognised only if recognising it (and any resulting income, expenses or changes in equity)
provides useful information (i.e. it must be relevant and a faithful representation).

Recognition may not always provide relevant information. For example:

 if it is uncertain whether an asset or liability exists (“existence uncertainty”); or

 it exists, but there is a low probability of a flow of economic benefits.

4.2.3 Derecognition

Derecognition is the removal of all (or part) of a recognised asset or liability from the statement of financial position.
It normally occurs when an item no longer meets the definition of an asset or liability when the entity:

 loses control of an asset;

 no longer has a present obligation for a liability.

4.3 Measurement Bases

The Conceptual Framework refers to just two main measurement bases: historical cost and current value.

 Historical cost is based on the transaction price when an asset was acquired/created or a liability was
incurred. This measurement basis does not generally reflect changes in values.

 Current value does reflect changes in value. The Conceptual Framework refers to three current value
measurements:

The price in an orderly transaction between market participants, as defined in IFRS

Fair value 13 Fair Value Measurement (see s.6 later in this chapter).

Value in use is the present value of cash flows expected to be derived from using
Value in use/ an asset and its ultimate disposal. Fulfilment value is the present value of
Fulfilment value resources transferred to fulfil a liability. These are entity-specific values.

The cost of an equivalent asset/consideration that would be received for an

Current cost equivalent liability at the measurement date.

Key Point

Current cost is an entry value: it reflects prices in the market in which the entity would acquire the asset (or incur the liability).
In contrast. fair value and value in use are exit values.

Although most IFRS Standards apply the historical cost measurement basis, some combine this with other
measurement bases (e.g. fair values for investment property and property, plant and equipment).

5.1 Historical Cost Accounting

 Traditionally, accounting is based on what was paid for an asset when it was originally bought (i.e. historical cost).
However, as economies have advanced, there is concern that historical cost accounting does not reflect the modern
economics of today's transactions.

5.1.1 Advantages of Historical Cost

 Easy to understand and follow because it does not change.

 Amounts are reliable as they are evidenced by a purchase transaction and can always be verified (e.g. to an
invoice or payment).

 Objective amounts are more difficult to manipulate, reducing the possibility of “creative accounting”.

 Conservative measures prevent overvaluation.

 Widely used throughout the world.

5.1.2 Disadvantages of Historical Cost

 There is a “mismatch” in reporting profit as current revenues are matched with out-of-date historical costs
(e.g. cost of goods sold and depreciation).

 Values of assets in the statement of financial position do not equate to the economic benefits to be earned
from their use.

 Holding gains are not separated from operating gains. Holding gains are gains made merely by holding onto
an asset.

Example 2 Holding and Operating Gain

An item of inventory was bought a year ago for $10. It could be sold today for $18, but to replace it would cost $15. The profit
of $8 is therefore made up of two components:

1. a holding gain of $5 ($15 − $10); and

2. an operating gain of $3 ($18 − $15).

 Historical cost accounting does not reflect the general rise in prices (inflation) affecting an economy. The
higher the price inflation, the greater the overstatement of profit.

5.2 Is Current Value Accounting the Answer?

5.2.1 Background

The accounting profession has attempted to introduce some form of current value accounting model for many
decades. (For example, in the 1980s, UK GAAP required listed companies to provide supplementary current cost
information in their financial statements.)

5.2.2 Advantages of Current Value Accounting

Current value accounting has several advantages over historical cost accounting:

 Current value provides information that is more relevant to users of the financial statements, especially for
companies with an older asset base.

 In times of inflation, current values of assets and liabilities are likely to be much higher than their recorded
amount.
 However, although current value accounting addresses the main issues of historical cost accounting, it has its issues.

5.2.3 Disadvantages of Current Value Accounting

Implementing current value accounting models has invariably caused problems and has never achieved the backing
of the preparers and analysts who prefer the more conservative approach of historical cost accounting.

 There is no one “current value” (see s.4.3).

 Availability of information. Although some current values are easily obtained (e.g. replacement cost of
inventory), the calculation of "value-in-use" (see Chapter 13) can be very subjective (and therefore less
reliable).

 Valuations may be almost impossible to verify, and comparisons between companies are even more difficult.

 The majority of users may not understand what the figures represent.

5.2.4 IFRS Stance

Currently, under IFRS, there is no formal model of current cost accounting; however, several standards require some
assets and liabilities to be measured at fair value, such as financial instruments. Some accountants believe that fair
value accounting is current cost accounting by another name.

Although current value accounting seeks to provide more relevant financial information than historical cost
accounting, it opens up new problems and issues greater than those under historical cost accounting.

6.1 IFRS 13 Fair Value Measurement

Key Point

IFRS 13 Fair Value Measurement does not specify when an entity should use fair value, but how it is used. (For example, IAS 40
allows fair value measurement of investment property, but it is IFRS 13 which specifies how that is measured.)

Definition

Fair value – the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date.

Key Point

The definition of fair value is based on an "exit price" (i.e. taking the asset or liability out of the entity) rather than an "entry
price" (i.e. bringing the asset or liability into the entity).

 When measuring fair value, all characteristics of the asset (or liability) that market participants would take
into account should be reflected in the valuation. This could include the condition or location of the asset
and any restrictions on its use.

 The definition is market based and is not entity specific. It reflects factors that market participants would
apply to the asset (or liability), not the factors that a specific entity would necessarily apply.
Definition

Active market – a market in which transactions for the asset or liability take place with sufficient frequency and volume to
provide pricing information on an ongoing basis.

Highest and best use – the use of a non-financial asset by market participants that would maximise the value of the asset or
the group of assets and liabilities (e.g. a business) within which the asset would be used.

Principal market – the market with the greatest volume and level of activity for the asset or liability.

Most advantageous market – the market that maximises the fair value of an asset (or minimises the fair value of a liability),
after taking transaction and transport costs into account.

6.2 Non-financial Assets

Fair value measurement of a non-financial asset (e.g. an investment property) reflects its highest and best use. The
highest and best use takes into account the following:

 the use which is physically possible;

 what is legally allowed; and

 the financial feasibility of using the asset.

The highest and best use does not reflect illegal activities but does reflect what is economically viable (considering
any financial constraints).

The highest and best use of an asset may be in combination with other assets (or other assets and liabilities) that
would be available to market participants.

If an entity uses a stand-alone asset but its best use would be in combination with other assets, fair value is based on
this best use (i.e. irrespective of its current use).

6.3 Price

IFRS 13 assumes that the transaction will occur in the principal market for the asset (or liability) if one exists. If there
is no principal market, the valuation must be based on the most advantageous market.

 Unless proved otherwise, the market in which the entity normally transacts is presumed to be the principal
market.

 The price is not adjusted for transaction costs.

 The price is adjusted for transport costs; if location is a characteristic of the asset, the price is adjusted for
any costs incurred to transport the asset from its current location to the principal (or most advantageous)
market.

Three valuation techniques are widely used to estimate fair value:

 Market approach:uses prices and other relevant information generated by market transactions involving
identical or comparable (i.e. similar) assets or liabilities.

 Cost approach: reflects the amount that would be required to replace the service capacity of the asset (i.e
current replacement cost).
  Income approach:converts future cash flows (or income and expenses) to a single current (i.e. discounted)
amount. Models which follow an income approach include:

o present value; and

o option pricing models (e.g. Black-Scholes-Merton).

Exam advice

Option pricing is not examinable.

6.4 Hierarchy of Inputs

Valuation techniques require the use of inputs (e.g. an income approach requires the use of estimated cash flows and
interest rates). Inputs are categorised as level 1 (highest priority), 2 or 3 (lowest priority).

6.4.1 Level 1 Inputs

Definition

Level 1 inputs –quoted prices in active markets for identical assets or liabilities which the entity can access at the
measurement date.

These inputs provide the most reliable evidence of fair value. These must be used, without adjustment, whenever
available, for example:

 quoted market prices of publicly traded shares on a stock exchanged;

 quoted prices of government bonds actively traded (e.g. over the counter in a secondary market).

6.4.2 Level 2 Inputs

Definition

Level 2 inputs – inputs other than quoted prices which are observable for the asset or liability, either directly or indirectly.

These would include prices for similar, but not identical, assets or liabilities, which were then adjusted to reflect the
factors specific to the measured asset or liability. For example:

 the fair value of fixed-income securities without active markets may use benchmark yields for similar
securities with observable prices;

 the fair value of a security that is not actively traded may be a broker’s quote based on observable market
data for similar instruments;

 the fair value of a building in use may be based on price per square metre for comparable buildings in similar
locations.

6.4.3 Level 3 Inputs

 Definition

Level 3 inputs – unobservable inputs for the asset or liability.

These inputs are relevant when there is minimal or no market activity for a particular asset or liability on the
measurement date (e.g. a decommissioning liability assumed in a business combination).

They are based on the entity’s assumptions about the assumptions that market participants would use in pricing the
asset or liability. These inputs involve a higher degree of subjectivity and may include the entity's own data or models
(e.g. internal data used to estimate future cash flows for a cash-generating unit).

Key Point

The techniques used to estimate fair values should maximise observable inputs wherever possible. The hierarchy (order) of
inputs aims to increase consistency of usage and comparability in measuring fair values and their related disclosures.

6.5 Disclosure

The disclosure requirements of IFRS 13 are extensive and depend on whether level 1, 2 or 3 inputs are used in the
measurement techniques. The disclosures required are of a quantitative and qualitative nature.

The standard also distinguishes between measurements of a recurring nature and those of a non-recurring nature.

Disclosures include the following:

 the reason for using fair value;

 the level of hierarchy used;

 description of techniques used for level 2 or 3 inputs;

 for non-financial assets, disclosure is required if the highest and best use differs from what the entity is using;
and

 for level 3 inputs, a reconciliation of the opening and closing balances and any amounts included in profit or
loss for the period.

Exam advice

The disclosures listed here are only a selection of those required, as the exam will not require extensive knowledge in this
area.

Syllabus Coverage

This chapter covers the following Learning Outcomes.

A. The Conceptual and Regulatory Framework for Financial Reporting

1. The need for a conceptual framework and the characteristics of useful information

1. Describe what is meant by a conceptual framework for financial reporting.

 2. Discuss whether a conceptual framework is necessary and what an alternative system might be.

3. Discuss what is meant by relevance and faithful representation and describe the qualities that enhance these
characteristics.

4. Discuss what is meant by understandability and verifiability in relation to the provision of financial
information.

5. Discuss the importance of comparability and timeliness to users of financial statements.

2. Recognition and measurement

1. Define what is meant by "recognition" in financial statements and discuss the recognition criteria.

2. Apply the recognition criteria to:

1. assets and liabilities

2. income and expenses

3. Explain the following measures and compute amounts using:

1. historical cost

2. current cost

3. value in use/fulfilment value

4. fair value

4. Discuss the advantages and disadvantages of the use of historical cost accounting.

5. Discuss whether the use of current value accounting fully addresses the issues related to historical cost
accounting.

3. Regulatory framework

C. Distinguish between a principles-based and a rules-based framework and discuss whether they can be
complementary.

Summary and Quiz

 The objective of general purpose financial statements is to provide financial information that is useful to
primary users in making decisions relating to providing resources to the entity.

 Financial statements are based on the underlying assumption that the entity is a going concern.

 There are two fundamental qualitative characteristics – relevance and faithful representation.

 There are four enhancing characteristics – comparability, verifiability, timeliness and understandability.

 Elements of financial statements are assets, liabilities, equity, income and expenses.

 Recognition is the process of capturing for inclusion in the statement of financial position or statement of
financial performance an item which meets the definition of an element.

 Measurement involves assigning monetary amounts. Bases include:

o historical cost (most common but often combined with other bases); and

o current value (current cost, value in use (for assets) and fulfilment value (for liabilities) and fair
value).

 IFRS 13 prescribes the techniques for measuring fair values; it does not state when to use fair values.

 Level 1 inputs should be maximised and level 3 inputs minimised.

I will provide you a paragraph or content from the ACCA Financial Reporting (FR) syllabus. Kindly read it carefully and
thoroughly. Based strictly and only on the content/paragraph I provide, generate one MCQ at a time. The MCQ must:
Match the style and format of ACCA FR exam questions. Be entirely based on the provided content (no outside
information, unless it’s from official ACCA FR past exam questions and directly relevant). Cover the entire scope of
the provided content gradually across multiple questions. For each MCQ: Ask the question first. Provide four answer
options: A, B, C, D. Wait for my answer. Then, tell me if my answer is correct or incorrect. Provide a clear explanation
on correct or incorrect answer, referencing the exact provided content. State the topic name the question relates to.
Give a score update in this format only: Correct: X out of Y | Percentage: Z% Keep asking new MCQs based on the
same content until I say stop. Do not repeat questions, and do not stop unless I instruct you to.