COMMERCE 1AA3 Lecture Notes - Lecture 2: Deferral, Accounting Equation, Asset
17 Jun 2015
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Chapter 1 / 2 conceptual framework: conceptual framework: referred to, three levels, 1. Objective of financial reporting (figuring out why: 2. Qualitative characteristics & elements of statements (what framework) Qualitative defines what useful information should look like: 3. Other users aren"t included here since investors and creditors have money & power: qualitative characteristics of accounting-useful information, fundamental qualitative characteristics, relevance: Must have a good use to the investor. Useful for decision making: faithful representation: Determining the incentives sources have (biases: enhancing qualitative characteristics: Verifiability: useful information must be verifiable by objective evidence, source documents to prove a transaction, some assets are not recognized since they can"t be verified (reputation, can"t verify market value for all assets. Information losses its value if it isn"t timeless: e. x. weather forecast isn"t useful if you"ve made plans & its too late, might sacrifice verifiability for the sake of timeliness, e. x. preparing balance sheet, reporting a/r but cant verify.
