Conceptual Framework 1

Why are we need for accounting conceptual framework

• Rule-making should build on and relate to an established body of concepts.

• establishes the concepts that underlie financial reporting.

• Review the basic assumptions of accounting.

The second level of conceptual framework

• Qualitative Characteristics and Elements of Financial Statements

• Objective of Financial Reporting

• Recognition, Measurement, and Disclosure Concepts.

This are the relevance values caracteristics

• Predictive, confirmatory, neutrality

• Predictive, confirmatory, materiality

• Predictive, confirmatory, completeness

Enhancing value to increase quality

• Completeness

• Comparability

• Quality

The company cannot select i formation to favor one set of interested parties over another

• Free from error.

• Completeness

• Neutrality

Basic element of Financial Reporting

• Asset, liability, Equity, Share capital

• Asset, Payable, Equity, Income, Expense

• Asset, Liability, Equity, Income, Expense

Periodicity Assumption

• Divide economic activities into time periode

• Transsction are recorded in period events occure

• Money is the common denominator