The conceptual framework Flashcards
1
Q
What are the fundamental qualitative characteristics of financial statements?
A
- Relevance = Faithful representation
- Materiality and its nature
2
Q
What are the enhancing qualitative characteristics?
A
1.) Comparability
2.) Verifiability
3.) Timeliness
4.) Understandability
3
Q
What is the definition of an asset?
A
An asset is a present economic resource controlled by the entity as a result of past events.
4
Q
What is the definition of a liability?
A
A Liability is a present obligation of the entity to transfer an economic resource as a result of past events.
5
Q
What is the definition of equity?
A
Residual interest in the assets of an entity after deducting all liabilities.
6
Q
What are the two measurement bases?
A
- historical cost
- current value
