Lecture 02: Conceptual framework + the accounting information system
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The concepts that underlie financial re-
Conceptual framework =
porting.
- Assets
- Liability
- Equity
Basic elements = - Income = Increases in assets or de-
creases in liabilities.
- Expenses = Decreases in assets or
increases in liabilities.
accounting information must be capable
of making a difference in a decision.
Ingredients =
Relevance (Fundamental Quality)
(a) Predictive value
(b) Confirmatory value
(c) Materiality (= Firm specific 'rele-
vance')
Ingredients =
Faithful representation (Fundamental (a) Completeness
quality) (b) Neutrality
(c) Free from error
1. Relevance
Fundamental qualities =
2. Faithful representations.
Qualities that are complementary tot the
fundamental qualitative characteristics.
(a) Comparability
(b) Verfiability
(Different observers reach same conclu-
Enhancing qualities =
sion)
(c) Timeliness
(Info should be on time for decision mak-
ing)
(d) Understandability
Basic assumptions = 1/3
Online studeren bij https://quizlet.com/_hef1f2
The concepts that underlie financial re-
Conceptual framework =
porting.
- Assets
- Liability
- Equity
Basic elements = - Income = Increases in assets or de-
creases in liabilities.
- Expenses = Decreases in assets or
increases in liabilities.
accounting information must be capable
of making a difference in a decision.
Ingredients =
Relevance (Fundamental Quality)
(a) Predictive value
(b) Confirmatory value
(c) Materiality (= Firm specific 'rele-
vance')
Ingredients =
Faithful representation (Fundamental (a) Completeness
quality) (b) Neutrality
(c) Free from error
1. Relevance
Fundamental qualities =
2. Faithful representations.
Qualities that are complementary tot the
fundamental qualitative characteristics.
(a) Comparability
(b) Verfiability
(Different observers reach same conclu-
Enhancing qualities =
sion)
(c) Timeliness
(Info should be on time for decision mak-
ing)
(d) Understandability
Basic assumptions = 1/3
