BU387 Chapter Notes - Chapter 2: Financial Statement, Financial Engineering, Income Statement
Document Summary
Helps users confirm or correct their previous expectations; has feedback/confirmatory value: representational faithfulness reflects the underlying economic substance of an event/transaction. Info that is representationally faithful is complete, neutral and free from material error or bias. Completeness statements should include all necessary information to portray underlying events. Neutrality information cannot be selected to favour one set of stakeholders over another. Standard setters must also choose the best standards regardless of economic consequences. Freedom from material error/bias information must be reliable: enhancing qualitative characteristics, comparability information that has been measured and reported in a similar way is considered comparable (company to company or year-to-year) Materiality info is material if including it or leaving it out would influence the judgement of a reasonable person (qualitative factors must be considered in determining materiality as well) Benefit the costs of providing the information must be weighed against the benefits that can be had from using the information.
