CONCEPTUALFRAMEWORKFORFINANCIALREPORTING幻灯片.pptVIP

C H A P T E R 2;Describe the usefulness of a conceptual framework. Describe efforts to construct a conceptual framework. Understand the objective of financial reporting. Identify the qualitative characteristics of accounting information. Define the basic elements of financial statements. Describe the basic assumptions of accounting. Explain the application of the basic principles of accounting. Describe the impact that constraints have on reporting accounting information.;Conceptual Framework;Need for a Conceptual Framework;Development of a Conceptual Framework;Three levels:;LO 2 Describe efforts to construct a conceptual framework.;“To provide financial information about the reporting entity that is useful to present and potential equity investors, lenders, and other creditors in making decisions in their capacity as capital providers.”;IASB identified the Qualitative Characteristics of accounting information that distinguish better (more useful) information from inferior (less useful) information for decision-making purposes.;Fundamental Quality – Faithful Representation;Fundamental Quality – Faithful Representation;Enhancing Qualities;Comparability: first,a company must present its financial information in a consistent manner from one accounting period to the next; second, the presentation of financial information must be consistent across firms so that the readers of financial statements are able to make comparisons. ;Understandability:To meet the needs of the users of financial statements, the information in the financial statements must be comprehensible.Understandability is enhanced when information is classied, characterized, and presented clearly and concisely. To satisfy the understandability qualitative characteristic, users have a reasonable knowledge of business and economic activities and accounting, and a willingness to study the information with reasonable diligence.;ASSUMPTIONS Economic entity Going concern Monetary unit Periodicity Accrual;Seco