Financial Accounting Standards Board (FASB) - Conceptual Framework of Financial Reporting By Business Enterprises

Question 1

7. What is the overriding objective of financial reporting?

Answer 1

Decision usefulness

• Faith rep - I can depend on the info; its compete, neutral and free from errror
• Relevance - relates to my decision, helps me predict and confirm predictions. i material to my decision.

Question 2

7. What are the (2) primary characteristics of financial information and what are their ingredients?

Answer 2

Remember “FARR”

1. Faithful Representation (can i depend on it?)
   - Completeness
   - Neutrality
   - Free from Error
2. Relevance (does it relate to my decision?)
   - Predictive Value
   - Confirmatory Value
   - Materiality

Question 3

7. What are the conceptual frameworks (4) qualitative enhancing characteristics?

Answer 3

1. Comparability
2. Verifiability
3. Timeliness
4. Understandability