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 2-11 LO 3 Understand the objectives of financial reporting
Chapter 2-11
Conceptual Framework Review: According to the FASB conceptual framework,the objectives of financial reporting for business enterprises are based on? a.Generally accepted accounting principles b.Reporting on management's stewardship. c.The need for conservatism. The needs of the users of the information. (CPA adapted) Chapter 2-12 LO 3 Understand the objectives of financial reporting
Chapter 2-12
Second Level:Fundamental Concepts Question: How does a company choose an acceptable accounting method,the amount and types of information to disclose,and the format in which to present it? Answer: By determining which alternative provides the most useful information for decision-making purposes (decision usefulness). Chapter 2-13 LO 4 Identify the qualitative characteristics of accounting information
Chapter 2-13 Question: How does a company choose an acceptable accounting method, the amount and types of information to disclose, and the format in which to present it? Answer: By determining which alternative provides the most useful information for decision-making purposes (decision usefulness)