Conceptual Framework & IFRS Flashcards
Define: Relevance
Capable of making a difference in a user’s decision making process. Made up of Predictive value and Comfirmatory value. Materiality should also be considered, which related to relevance (Roger is PC)
Define: Predictive Value
Helping decision makers predict or forecast future results.
Define: Confirmatory Value (Feedback Value)
Confirm or correct prior predictions.
Define: Materiality
Its omission or misstatement could influence a user’s decision (how significant amount is in relation to the entire picture). This relates most closely to Relevance
Define: Faithful Representation
FENCe
Information depicts what it intends to represent. Consist of Free from Error, Neutrality and Completeness.
Define: Neutrality
Free from bias.
Define: Completeness
All information necessary to users is provided.
Enhancing Qualitative Characteristics of Accounting Information Include:
CUT like a V
Comparability (Consistency)
Understandability
Timeliness
Verifiability
Define: Comparability
Same principles are being used with business enterprises in similar industry.
Define: Consistency
Same accounting methods in different periods.
Define: Understandability
Classifying, characterizing and presenting information clearly and concisely.
Define: Timeliness
Information is available in a timely fashion to influence decision.
Define: Verifiability
Independent knowledgeable observers would agree.
Define: Cost/Benefit Constraint
Cost of obtaining and presenting information should not excees the benefits.
Define: Physical Capital Maintenance Concept
An event is recognized when an asset is sold or a liability is settled.
Define: Financial Capital Maintenance Concept
An event is recognized as a change in the value of an asset or liability occurs (recognizes holding gains and losses).
Define: Recognition
Reporting an item in the financial statements (booking it).
Define: Realization
Converting non-cash resources into cash or a claim to cash.
Define: Principal Market
The market where the greatest volume and level of activity occurs.
Define: Most Advantageous
The market that maximizes price received for an asset or minimizes the price to transfer a liability.
Define: Market Approach
A valuation technique that uses prices and relevant information from market transactions for identical or comparable assets/liabilities
Define: Income Approach
A valuation technique that converts future revenues and expenses or cash flows into a single current amount.
Define: Cost Approach
A valuation technique that uses the current cost of replacing the service capacity of an asset.
Define: Other Comprehensive Basis of Accounting (OCBOA)
A financial reporting framework, other than GAAP, used for the preparation of financial statements.
Define: Generally Accepted Accounting Principles (GAAP)
A financial reporting framework set forth by the FASB to be used for the preparation and presentation of financial statements.
Define: Financial Accounting Standards Board (FASB)
The board that is responsible for maintaining the FASB Accounting Standards Codification, the only authoritative source of GAAP, through the issuance of Accounting Standards Updates (ASUs) and is responsible for issuing statements on financial accounting concepts (SFACs), the framework upon which GAAP is based.
Define: Emerging Issues Task Force (EITF)
A board created by FASB to address new and unusual financial transactions.
Define: International Financial Reporting Standards (IFRS)
A comprehensive financial reporting framework established and mainteining by the International Accounting Standards Board (IASB) used for the preparation of financial statements in many countries outside of the United States and accepted, in many cases, for financial reporting with the U.S.
