ACCT 3110 1st Edition Lecture 2Outline of Last Lecture II. Intro to Financial AccountingIII. USGAAP vs. IFRSIV. FASB’s CodificationV. SEC and Sarbanes-OxleyOutline of Current Lecture VI. Conceptual FrameworkVII. Qualitative CharacteristicsVIII. Basic Assumptions of Financial ReportingCurrent LectureConceptual Framework: Five rules for creating new accounting codesQualitative Characteristics: Qualities that make the data useful to external parties- Relevance: Information that is capable of influencing a decisiono Predictive Value: Can be used to form expectationso Confirmatory Value: Can be used to confirm prior expectationso 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 happenedo Completenesso Neutrality: Follows GAAP, not personal opiniono 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 partiesThese 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 currencyPeriodicity: Record statements by period, usually