Clemson ACCT 3110 - Conceptual Framework for Financial Reporting (2 pages)

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Conceptual Framework for Financial Reporting



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Conceptual Framework for Financial Reporting

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Lecture number:
2
Pages:
2
Type:
Lecture Note
School:
Clemson University
Course:
Acct 3110 - Intermediate Financial Accounting I

Unformatted text preview:

ACCT 3110 1st Edition Lecture 2 Outline of Last Lecture II Intro to Financial Accounting III USGAAP vs IFRS IV FASB s Codification V SEC and Sarbanes Oxley Outline of Current Lecture VI Conceptual Framework VII Qualitative Characteristics VIII Basic Assumptions of Financial Reporting Current Lecture Conceptual Framework Five rules for creating new accounting codes Qualitative Characteristics Qualities that make the data useful to external parties Relevance Information that is capable of influencing a decision o Predictive Value Can be used to form expectations o Confirmatory Value Can be used to confirm prior expectations o Materiality Info is material if omitting it could influence decisions Depends on the size scope of the company 30 million might be material to a small company but immaterial to a large company like GE Faithful Representation Information matches what actually happened o Completeness o Neutrality Follows GAAP not personal opinion o Free from error Comparability Unless you re able to compare between companies you can t tell if a company is really doing well or not Verifiability Timeliness Have to issue financial statements soon after the end of year December 31st so usually issued around March so that information is still relevant Understandability Understandable to external parties These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute Economic Entity Company separates owners from business report just on business not opinion of people Going Concern Unless evidence otherwise assume company will continue in business Historical Cost Keep asset cost recorded the same year to year Liquidation Basis If company is going out of business record asset on books as amount you would expect to sell it for Liquidation value Monetary Unit Record statements in local currency Periodicity Record statements by period usually monthly



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