The Conceptual Framework’s vision of ideal financial reporting is unlikely to be achieved in full, because it takes time to understand, accept and implement new ways of analysing transactions and other events. The Conceptual Framework establishes the concepts that underlie those estimates Characteristics of Financial Information: Financial information needs to be USEFUL to investors and creditors for making decisions about providing capital. However, those reports are not primarily directed to these other groups.įinancial reports are based on estimates and judgements ACC101 FALL2020 (11TH ed) Chapter 1 Review 2 PCAOB (Public Company Accounting Oversight Board): Determine the auditing standards and review performance of auditing firms. Regulators and the public may also find general purpose financial reports useful. Management need not rely on general purpose financial reports because it is able to obtain the financial information it needs internally. (However, an entity can include additional information for a particular subset of primary users) Standards try to meet the needs of the maximum number of primary users. Chapter 3: Overview of Accounting Standards. Chapter 2: Framework for Preparation and Presentation of Financial Statements. Chapter 1: Introduction to Accounting Standards. Information from other sources is needed, for example, general economic conditions and expectations, political events and industry/company outlooks.įinancial accounts are not designed to show the value of an entity but they help users estimate it Study Material applicable for May, 2021 examination onwards - Paper-1: Accounting.
However, these cannot provide all of the information needed.
Users cannot require reporting entities to provide information directly to them, so must rely on general purpose financial reports
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