ch07 - PREVIEW OF CHAPTER 7 ACCOUNTING PRINCIPLES The...

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PREVIEW OF CHAPTER 7 ACCOUNTING PRINCIPLES Monetary unit Economic entity Time period Going concern Assumptions The Conceptual Framework of Accounting Objectives of reporting Qualitative characteristics Elements of financial statements Operating guidelines Principles Revenue recognition Matching Full disclosure Cost Constraints in Accounting Materiality Conservatism Summary of conceptual framework
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THE CONCEPTUAL FRAMEWORK OF ACCOUNTING Generally accepted accounting principles : a set of rules and practices recognized as a general guide for financial reporting purposes. Generally accepted means that these principles must have substantial authoritative support. This support usually comes from the Financial Accounting Standards Board ( FASB ) and Securities and Exchange Commission ( SEC ). The FASB has the responsibility for developing accounting principles in the United States.
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The conceptual framework developed by the FASB serves as the basis for resolving accounting and reporting problems. The conceptual framework consists of: 1 objectives of financial reporting ; 2 qualitative characteristics of accounting information ; 3 elements of financial statements ; and 4 operating guidelines ( assumptions , principles , and constraints ). THE CONCEPTUAL FRAMEWORK OF ACCOUNTING
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OBJECTIVES OF FINANCIAL REPORTING To provide information that : 1 Is useful to those making investment and credit decisions. 2 Is helpful in assessing future cash flows. 3 Identifies the economic resources ( assets ), the claims to those resources ( liabilities ), and the changes in those resources and claims.
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The FASB concluded that the overriding criterion by which accounting choices should be judged is decision usefulness
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This note was uploaded on 05/21/2011 for the course ACY 1111 taught by Professor Km during the Spring '10 term at CUHK.

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ch07 - PREVIEW OF CHAPTER 7 ACCOUNTING PRINCIPLES The...

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