B407F Week 13 (student)

B407F Week 13 (student) - B407F Overview of the framework...

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1 1 B407F Overview of the framework of accounting and interim reports 2 The Framework was to be the foundation for building a set of coherent accounting standards and rules. The Framework is to be a reference of basic accounting theory for solving emerging practical problems of reporting. Objectives of the Conceptual Framework Create PDF files without this message by purchasing novaPDF printer ( http://www.novapdf.com )
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2 3 Conceptual Framework for Financial Reporting Objectives: (1) Useful in investment and credit decisions (2) Useful in assessing future cash flows (3) About enterprise resources, claims to resources and changes in them 4 Conceptual Framework for Financial Reporting What are these qualitative characteristics? Create PDF files without this message by purchasing novaPDF printer ( http://www.novapdf.com )
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3 5 Primary qualities of accounting information are relevance and reliability. Secondary qualities are comparability and consistency of reported information. Qualitative Characteristics of Accounting Information 6 “Relevance of information means information capable of making a difference in a decision context.” Ingredients of relevant information are: Timeliness Predictive value - Feedback value – allows users to confirm or correct prior expectations Primary Characteristic of Accounting Information: Relevance Create PDF files without this message by purchasing novaPDF printer ( http://www.novapdf.com )
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4 7 Information is Reliable when it can be relied on to represent the true, underlying situation. The ingredients of reliable information are: verifiability representational faithfulness neutrality (unbiased) Primary Characteristic of Accounting Information: Relevance 8 Comparability: the similar measurement and reporting for different enterprises. Consistency: application of the same accounting treatment to similar events by an enterprise from period to period. Secondary Characteristics of Accounting Information Create PDF files without this message by purchasing novaPDF printer ( http://www.novapdf.com )
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5 9 Conceptual Framework for Financial Reporting What are these Elements? 10 Assets Liabilities Equity Investment by Owners Distributions to Owners Comprehensive Income Revenues Expenses Gains Losses Basic Elements of Financial Statements Create PDF files without this message by purchasing novaPDF printer ( http://www.novapdf.com )
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