Management and Organizational Studies 1023A/B Chapter Notes - Chapter 2: Conceptual Framework, Financial Statement, Moral Hazard

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

Document Summary

Having a developed conceptual framework in order to build on it later on make it more useful and consistent later on. Important that the framework increases financial statement users" understanding of and confidence in financial reporting. 6 statements of financial accounting concepts were then b[published: 7th statement on accounting measurement was added in 2000. Materiality - how important a piece of information is. Will this information make a difference to the decision maker. When determining if something is material or not, the amount in question is often compared with the entity"s amount of other revenues and expenses, assets and liabilities, or net income. Materiality depends on both a relative amount and relative importance. Also need to consider the items impact on other factors. Inadequate or inappropriate description of an accounting policy. Judgement should determined based on reasonableness and practicality with.