Management and Organizational Studies 3360A/B Chapter Notes - Chapter 2: Conceptual Framework, Financial Statement, Measurement Uncertainty

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 3360A/B
• Professor: Stacey Hann

Document Summary

Chapter 2 conceptual framework underlying financial reporting. Conceptual framework: conceptual framework coherent system of interrelated objectives and fundamentals that can lead to consistent standards and that prescribes the nature, function, and limits of financial accounting and financial statements, creates standards for accounting profession. Increases financial statement users" understanding of and confidence in financial reporting: a reference of basic accounting theory for solving new and emerging practical problems of reporting. Elements of financial statements: elements of financial statements include: assets, liabilities, equity, revenues, expenses, gains and losses. Assets: assets have three essential characteristics, there is some economic benefit to the entity, the entity has control over that benefit, the benefit result from a past transaction or event, assets are economic resources. Equity: equity a residual interest in an equity that remains after deducting its liabilities from its assets, also known as net worth, e. g. ordinary shares, preferred shares, retained earnings, and under ifrs accumulated other comprehensive income.