First Level:Basic Objectives Financial reporting should provide information that: (a) is useful to present and potential investors and creditors and other users in making rational investment,credit,and similar decisions. (b)helps present and potential investors and creditors and other users in assessing the amounts,timing,and uncertainty of prospective cash receipts. (c)portrays the economic resources of an enterprise,the claims to those resources,and the effects of transactions,events,and circumstances that change its resources and claims to those resources. Chapter 1-11 LO 3 Understand the objectives of financial reporting
Chapter 1-11
Second Level:Qualitative c Characteristics Users of DECISION MAKERS accounting information AND THEIR CHARACTERISTICS Constraints COST BENEFITS MATERIALITY (Pervasive constraint) (Threshold for recognition) Illustration 2-2 User-specific qualities Hierarchy of UNDERSTANDABILITY Accounting Qualities Pervasive criterion DECISION USEFULNESS Primary qualities RELEVANCE RELIABILITY Ingredients Predictive Feedback of primary Timeliness Representational qualities value value Verifiability faithfulness Neutrality Secondary Comparability Consistency qualities Chapter 1-12 LO 4 Identify the gualitative characteristics of accounting information
Chapter 1-12 Hierarchy of Accounting Qualities
ASSUMPTIONS PRINCIPLES CONSTRAINTS 1.Economic entity 1.Historical cost 1.Cost-benefit Third Relevance and Reliability level QUALITATIVE CHARACTERISTICS ELEMENTS Relevance Assets,Liabilities,and Equity Reliability Investments by owners Distribution to owners Second level Comparability Comprehensive income Revenues and Expenses Consistency Gains and Losses Illustration 2-6 Conceptual OBJECTIVES Framework for 1.Useful in investment Financial and credit decisions 2.Useful in assessing Reporting future cash flows First level 3.About enterprise resources,claims to resources,and changes in them LO 4 Identify the gqualitative Chapter characteristics of 1-13 accounting information
Chapter 1-13 Conceptual Framework for Financial Reporting First level Second level Third level
ASSUMPTIONS PRINCIPLES CONSTRAINTS 1.Economic entity 1.Historical cost 1.Cost-benefit Third Comparability and Consistency level QUALITATIVE CHARACTERISTICS ELEMENTS Relevance Assets,Liabilities,and Equity Reliability Investments by owners Distribution to owners Second level Comparability Comprehensive income Revenues and Expenses Consistency Gains and Losses Illustration 2-6 Conceptual OBJECTIVES Framework for 1.Useful in investment Financial and credit decisions 2.Useful in assessing Reporting future cash flows First level 3.About enterprise resources,claims to resources,and changes in them LO 4 Identify the gqualitative Chapter characteristics of 1-14 accounting information
Chapter 1-14 Conceptual Framework for Financial Reporting First level Second level Third level
ASSUMPTIONS PRINCIPLES CONSTRAINTS 1.Economic entity 1.Historical cost 1.Cost-benefit Third Elements level QUALITATIVE CHARACTERISTICS ELEMENTS Relevance Assets,Liabilities,and Equity Reliability Investments by owners Distribution to owners Second level Comparability Comprehensive income Revenues and Expenses Consistency Gains and Losses Illustration 2-6 Conceptual OBJECTIVES Framework for 1.Useful in investment Financial and credit decisions 2.Useful in assessing Reporting future cash flows First level 3.About enterprise resources,claims to resources,and changes in them LO 5 Define the basic Chapter elements of financial 1-15 statements
Chapter 1-15 Conceptual Framework for Financial Reporting First level Second level Third level