RSM220H1 Chapter Notes - Chapter 2: Revenue Recognition, Barter, Financial Engineering
Document Summary
Conceptual framework: coherent system of interrelated objectives and fundamentals that can lead to consistent standards and prescribes nature, function, and limits of financial accounting and financial statements, is necessary because: standards over time. Standard setting build on established body of concepts and objects. With sound conceptual framework as starting point, can add useful and consistent. Creates coherent set of standards and rules, increasing users" understanding and confidence in financial reporting and comparability across different companies statements. Universally accepted conceptual framework lets users solve new problems more quickly: is foundation for building a set of accounting concepts and objectives, is reference of basic accounting theory for solving new and emerging practical problems of reporting. Provide information that is: useful to users, decision relevant. Qualitative characteristics of useful information: determining which alternative gives information most useful for decision-making. Relevance: make difference in decision, has predictive value, feedback/confirmatory value. Helps users make predictions about final outcome of past and future events.
