ADMN 3221H Lecture Notes - Lecture 2: Revenue Recognition, Financial Statement, Retained Earnings

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Lecture 2 chapter 2 (conceptual framework for financial reporting)and 3. What is it: definition, using experience and education to make decisions draw on training, experience, expertise and knowledge, not always one correct answer, context is very important. How do you use it: substance versus form of transaction. Indicate the usefulness and describe the main components of conceptual framework for financial reporting. Explain the factors that contribute to choice and/or bias in financial reporting decisions. 1st component elements of the financial statements revenue: expenses, assets liabilities, shareholders" equity (includes shares, retained earnings, and accumulated oci, gains / losses. Economic entity assumption reporting on a consolidated basis? control criteria used to determine what control is revenue recognition. Matching revenues and expenses are incurred and reported in the same period. Fundamental: relevance (predictive and feedback value, representational faithfulness (complete, neutral and free from error) Assumptions: economic entity, periodicity, monetary unit, going concern.

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