BUSI 2150U Chapter Notes - Chapter 2: Accounting Equation, Income Statement, Financial Statement
Document Summary
Chapter 2 financial statements: a window on an entity. The iasb has developed a conceptual framework that provides a basis for preparing and. These are relevance and faithful representation: the framework also describes four enhancing qualitative characteristics that improve the usefulness of information that is relevant and faithfully represented, these are comparability, verifiability, timeliness, and understandability. There are four basic assumptions that underlie gaap. The assumptions are: unit of measure, entity, going concern, periodic reporting. The accounting equation is the conceptual foundation of accounting and is defined as: assets = liabilities + owners" equity. All economic events entered into an accounting system must be summarized in terms of the accounting equation. The equality of the equation must always be maintained. There are five basic elements in the financial statements: assets, liabilities, owners" equity, revenues, and expenses, assets are economic resources that provide future benefits to an entity.
