How does the conceptual framework describe the qualitative characteristics of financial statements?
The Framework clarifies what makes financial information useful, that is, information must be relevant and must faithfully represent the substance of financial information. Relevance and faithful representation remain as the two fundamental qualitative characteristics.
What are the qualitative characteristics of financial reporting?
The two fundamental qualitative characteristics of financial reports are relevance and faithful representation. The four enhancing qualitative characteristics are comparability, verifiability, timeliness and understandability.
What are parts of the FASB conceptual framework?
Chapter 2, p. FASB Conceptual Framework: Definitions and Concepts.
What is conceptual framework for financial reporting?
The Conceptual Framework for the Financial Reporting (let’s title it just “Framework”) is a basic document that sets objectives and the concepts for general purpose financial reporting. Its predecessor, Framework for the preparation and presentation of the financial statements was issued back in 1989.
What is the role of the FASB?
The Financial Accounting Standards Board (FASB) is an independent nonprofit organization responsible for establishing accounting and financial reporting standards for companies and nonprofit organizations in the United States, following generally accepted accounting principles (GAAP).
What are the 4 qualitative characteristics?
As figure 1 shows, the four principal qualitative characteristics are understandability, relevance, reliability and comparability (IASB, 2006).
What are the 6 qualitative characteristics of financial information?
The quality of financial statements is enhanced by comparability, verifiability, timeliness, and understandability.
What are the attributes of FASB?
FASB (Financial Accounting Standards Board) lists six qualitative characteristics that determine the quality of financial information: Relevance, Faithful Representation, Comparability, Verifiability, Timeliness, and Understandability.
What is the purpose of the FASB conceptual framework?
The framework provides the FASB with a foundation for setting standards and concepts to use as tools for resolving accounting and reporting questions.
Who does FASB report to?
The FASB derives its authority to set accounting standards from the U.S. Securities and Exchange Commission (SEC). The standards issued by the FASB are officially recognized as authoritative by the SEC, as well as the American Institute of Certified Public Accountants (AICPA).
What is the FASB conceptual framework for financial reporting?
Along with other FASB Concepts Statements, FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting, establishes the concepts that underlie financial reporting standards. When completed, the framework is expected to be a coherent system of concepts that flow from the objective of financial reporting.
What is the conceptual framework?
The Conceptual Framework is a coherent system of concepts that flow from the objective of financial reporting.
What is Chapter 1 of FASB concepts statement?
Chapter 1 of Concepts Statement 8 emphasizes usefulness to present and potential investors, creditors, and others in making rational investment, credit, and similar decisions. FASB Concepts Statement No. 4,
What is the FASB doing about materiality?
The FASB is issuing the proposed amendments to Chapter 3, Qualitative Characteristics of Useful Financial Information, of Concepts Statement 8 to ensure that the materiality concepts discussed are consistent with the legal concept of materiality.