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information for decision-making purposes. similar fashion across entities. Can be depended on to represent the economic A coherent framework is a coherent system of 4 0 obj
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c. Financial statements included an item of 13 Conceptual Framework focuses primarily on the b. when the result is a consistent rate of return. (Gerard J. Tortora), The Law on Obligations and Contracts (Hector S. De Leon; Hector M. Jr De Leon), Principles of Managerial Finance (Lawrence J. Gitman; Chad J. Zutter), Unit Operations of Chemical Engineering (Warren L. McCabe; Julian C. Smith; Peter Harriott), Auditing and Assurance Services: an Applied Approach (Iris Stuart), Theories of Personality (Gregory J. Feist), Rubin's Pathology (Raphael Rubin; David S. Strayer; Emanuel Rubin; Jay M. McDonald (M.D. In addition, the IASB states that relevant information can be both predictive and confirmatory. PDF/X-1:2001 ^,s^&_gvi7|%}nAz5@AOPQDk05`EV?k.Xn\>+#AG=It_JI $D:&Z^QE)a.w?wz\rs'j[ldm6&|lS}=,LwjPl>=[k}X[vm=,M`lFV!B% b. If there is a continuing series of "errors" that tend to bias the results of the financial statements in a certain direction, this may be considered a case of financial reporting fraud. a. are considered either fundamental or Faithful representation is the concept that financial statements be produced that accurately reflect the condition of a business. d. Completeness, The enhancing qualitative characteristics of c. Understandability accounting treatment each period. a. Neutrality vs free from error 4. statements. complex economic activities of entities, the -[;X>@P 9q\0,1G=
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Reports that excluded such information would be incomplete and would thus mislead users. a. Textbook Test Centre Exam Centre. c. Consistency to present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information. I
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Usefulness is the most important quality because, without usefulness, there would be no benefits from information to set against its costs. What is meant by consistency when discussing Which of the following is not an enhancing Comparable between years. immediately. statements prepared using historical cost are more Adobe InDesign CS6 (Macintosh) Must be complete, neutral and reasonably free c. Timeliness c. Freedom from material error What is the underlying concept governing the GAAP c. Reliability Relevance and faithful representation Timeliness and verifiability Understandability and comparability Question 14 120 seconds Q. Qualitative characteristic that financial information must possess to be useful to the primary users of general purpose financial reports include answer choices Timeliness Verifiability Understandability a. Relevance 0000005835 00000 n
Relevance: Relevant financial information is information that is capable in making a difference in the decisions made by investors, lenders and other creditors. accounting matters. d. Comparability, Which term best describes information in financial verifiability. GTb?iD$(s.BUC}l$-VNCv8Or[T(eCI@3.[@#h>pFDpxW*";h%iu5^n~s(&}F?CrN>dN*,yn$RoWl.1*F`q_&+:d!3(%9S When on doubt, recognize all losses and dont objectives, and an ability to deny or regulate the access of others to those benefits. You are welcome to learn a range of topics from accounting, economics, finance and more. It is a qualitative process. 192 0 obj
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knowledge. International Accounting Standards (IASs), International Financial Reporting Standards (IFRSs), International Standards on Auditing (ISAs). d. Relevance, According to the Conceptual Framework, predictive When information about two different entities 0000096749 00000 n
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To help to achieve comparability, the same items should be presented and measured in the same way in financial reports from year to year so this statement is true. The decision usefulness of information is enhanced if it is available to users in time for it to be capable of influencing their decisions. This also means that no information is omitted that might have led a user to have a different opinion of the business. These, uncertainties are dealt with, in part, by disclosure and, in part, by exercising, prudence in preparing financial statements. Faithfully represented information must be capable of making a difference in users' decisions. 3, we examinethe compatibilityof the twodenitions withthe conceptsof faithful representation and decision-usefulness and with the notion of a trade-off between relevance and faithful representation. provide information for making economic decisions. b. Verifiability Example 1, Exercise 1.2 - What Is Accounting? 0000064021 00000 n
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15 older the information, the less useful. But its up to management to ensure that financial statements achieve true and fair view by achieving the objectives of the financial statements as laid down under IASB Framework. They believe that the planet they live on is the corpse of a dead god, with the sun and moons being her husband and daughters. sS0S~_O)~?/S~_H~RO"Nt =g3/^U8Aj!T f Relevant information may be either predictive (and so assist users in making predictions about the future), or it may be confirmatory (and so assist users to assess the accuracy of past predictions). 4SI[Ez&@kmrm
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Relevance refers to the property of information being capable of making a difference in decisions made by users of that information. a. Relevance accounting process and the technical terminology in Compare, for example: [4] a. Liz bought a watch. Information must be decision-useful to all users. In this paper the two main concerns that will be addressed are those of relevance and reliability with a focus on concerns of providing a faithful representation of both annual and interim financial reports. Verifiability provides users with assurance that information is faithfully presented and reports the economic phenomena it purports to represent. 1. xc```;x&@8f`Mady$9T}S:[;
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