IASB Conceptual framework, including objective and qualitivae characteristics, required reporting elements, and constraints and assumptions.
Main tennant is to provide objective financial information that is usefuel in maing decisions about providing resources to an enitty. The resource providders include investors, lenders, and other creditors. Users of financial staments need info about firm's peformance, financial position, and cash flow.
- TWO FUNDAMENTAL characteristics
- 1. Relevance- financial statments are relelvant if information in them can influence users' economic decision. To be relevant, information should have predictiv value, confirmatory value, or both. Materiality is an aspect of relevance.
- 2. Faithful representation - Information that is faithfully rperesentative is complete, neutrals, and free of error.
There are four characterisitcs that enhance relevance and faithful representations: comparabilitiy, verifiablility, timeliness, and understandability.
Required reporting elements are Assets, liabs, equity, income, and expenses.
Constraints, are that the benefit users gain from information shopuld be greater than the cost of presenting it. Another contraint is the fact that non-quanitifable information about a company cannot be caputred directly in financial statements (brand loyalty, reputation, etc.)
Two important underlying assumptions are accrual accounting and going concern.