chap 2: objective of financial reporting Flashcards
it is a complete, comprehensive, and single document promulgated by the international accountaning standards board.
conceptual framework
it is a summaryof the terms and concepts that underlie the preparation and presentation of financial statements for external users.
conceptual framework
it describes the concepts for general purpose financial reporting.
conceptual framework
it is intended to guide standard setters, prepares, and users of financial information in the preparation of statements.
conceptual framework
it is the underlying theory for the development issued accounting standards.
conceptual framework
it will be used in future standard setting decision but no changes are made to the current ifrs.
conceptual framework
the conceptual framework provides the foundation standards that:
a. contribute to transparency by enhancing international comparability and quality of financial information.
b. strenthen accountability by reducing information gap between the providers of capital and the people to whom they have entrusted their money.
c. contribute to economic efficiency by helping investor identify opportunities and risks across the world.
what are the purposes of revised conceptual framework?
a. to assist the iasb to develop ifrs standards based on consistent concepts.
b. to assist preparers of financial statements to develop consistent accounting policy when no standard applies to a particular transaction or other event or where an issue is not yet addressed by an ifrs.
c. to assist preparers of financial statements to develop accounting policy when a standard allows a choice of an accounting policy.
d. to assist all parties to understand and interpret the ifrs standards.
true or false: it is to be stated that the conceptual framework is not an international financial reporting standard.
true
true or false: nothing in the conceptual framework overrides any specific international financial reporting standard.
true
under the cfas, the users of financial information may be classfied into two namely:
primary users and other users
it includes the existing and potential investors, lenders, and other creditors.
primary users
it includes the employees, customers, governments and their agencies, and the public.
other users
they are the users of financial information are the parties to whom general purpose financial reports are directed.
primary users
who are the users who cannot require reporting entities to provide information directly to them and therefore must rely on general purpose financial reports for hos much of the financial information is needed.
primary users
who are concerned with the risk inherent in and return provided by their investment?
existing and potential investors. the investors need information to help them determine whether they should buy, hoid, or sell. shareholders are also interested in information which enables them to assess the ability of the entity to pay divedends.
they are interested in information which enables them to determine whether their loans, interest thereon, and other amoung owing to rhem will be paid when due.
lenders and other creditors
theyare parties that may find the general purpose financial reports useful but the reports are not directed to them primarily.
other users
they are interestedin information which enables them to assess the ability of the entity to provide remuneration, retirement benefits, and employment opportunities.
employees
they have an interest in information about the continuance of an entity especially when they have a long-term involvement with or are dependent on the entity.
customers
