Management and Organizational Studies 1023A/B Lecture Notes - Lecture 2: Financial Statement, Dog Walking, Revenue Recognition

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 1023A/B
• Professor: Barry Hawn

Document Summary

How do we know how to create this accounting work. Usefulness of a conceptual framework: this framework helps us narrow down what rules to use, the framework is like a constitution; it"s a "coherent system of interrelated objectives, enhances comparability of financial statements of different companies. Increases financial statement users" understanding of an confidence in financial reporting. Objective of financial reporting: trueblood committee (1979"s, objective of financial reporting is to provide valuable information, every rule should have this in mind, useful to users, decision relevant. An error is big enough that the user changes their decision. The error is big enough that the reader actually cares: its normal for a big company to have errors in their statements, we have determined that reliability is more important than relevance. Trade-offs: when one qualitative characteristic is sacrificed for another. Constraints: costs vs. benefits, benefits of using the information should outweigh the costs of providing that information.