Cummulative Deck Flashcards
Fundamental Qualitative Characteristics
Relevance and Faithful Representation
Relevance
Predictive, Confirmatory, Material
Faithful Representation
Completeness, Neutrality, Free from error
Completeness
All necessary facts include in the information
Neutral
Information free from bias
Free from error
info doesn’t contain any material errors
Predictive value
help make predictions
Confirmatory
provide information about earlier expectations for predictions
Material
Does the information matter to the user
Enhancing Characteristics
Comparability, verifiability, timeliness, undesirability
Comparability
can info be used to compare other companies in the same industry
Verifiability
observer reach the same conclusion
timeliness
info recent enough to make a decision
understandability
user with reasonable business understanding can understand and draw conclusions
FASB due process
First a project gets added to the agenda
Second, they conduct research and issues a discussion
memorandum
Third, they hold public hearings on the topic
Fourth they evaluate research and comments from
interested parties and then issue an Exposure Draft, this is
the first version of the new standard
Fifth, they solicit additional comments and modify the
exposure draft if needed
Sixth, they finalize the new accounting guidance by a vote, they need a majority vote which is 4 out of the 7 FASB
members. If approved, they issue the new standard as an
Accounting Standard Update (ASU)
