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ASU - BMS 300 - Practice Upload - Class Notes

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ASU - BMS 300 - Practice Upload - Class Notes

School: Arizona State University
Department: Biomedical Science
Course: Organization and Management Leadership iCourse
Professor: David McKinnon
Term: Fall 2016
Tags: practice upload
Name: Practice Upload
Description: Practice Upload
Uploaded: 09/19/2016
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background image CH 2 ­ Conceptual Framework  FASB’s conceptual framework serves as a foundation for giving you insights into the  “what”, “why” and “how” of understanding financial statement elements and  disclosures Conceptual Framework – Statements of Financial Accounting Concepts (SFAC) Broad concepts that are intended to establish useful & consistent standards.  (The Concept  Statements are NOT authoritative GAAP.)  This framework is used by FASB: To develop a coherent set of standards and rules. To solve new and emerging practical problems. To prescribe the nature, function, and limits of financial accounting and  financial statements. The “Conceptual Framework” consists of (8) concept statements.  
background image I. Understanding the Terminology Used in the Conceptual Framework A. QUALITATIVE CHARACTERISTICS – Distinguishes between “more useful” and “inferior”  information. 1.  “Primary” Qualities (what makes the info useful): Relevance by knowing the information, it is capable of making a difference to the decision maker. Predictive Value – more likely to correctly forecast future results Confirmatory Value (Feedback Value) – confirm or correct prior expectations. Materiality – if by omitting or misstating the information, it would influence the decisions 
of the user. 
(deciding if something is an asset or an expense) 
Provide users with the ability to:  1) Assess the amount timing and uncertainty of future cash  flows 2) Asses the company’s assets,  lib and equity  Why we use  “comparative” 
statements
background image Faithful Representation the info must faithfully represent the events that actually happened  (substance over form .) all information is ethically correct Complete ­ disclose all info necessary to understand the true economic impact of the event. Neutral – without bias.  (Not weighted, emphasized, de­emphasized, etc. to favor one party 
or another.)
Free from Error – Does NOT mean perfectly accurate; describe the process & limitations 
for using estimates & no errors in “the process” of “using the best available information”
2.   Enhancing  Qualitative Characteristics:   Comparability  – ability to compare with similar information reported by  other entities and by  the  same entity across time periods.  (Yr 1 – Yr 2 – Yr 3).  This quality includes consistency. Verifiability  – two independent parties using the same information would come to the same  conclusions…therefore it can be relied on Timeliness  – must report the information in a timely manner before it loses its value. Understandability  – understandable to users with reasonable financial knowledge &  willingness to study the information.

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School: Arizona State University
Department: Biomedical Science
Course: Organization and Management Leadership iCourse
Professor: David McKinnon
Term: Fall 2016
Tags: practice upload
Name: Practice Upload
Description: Practice Upload
Uploaded: 09/19/2016
10 Pages 7 Views 5 Unlocks
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  • Notes, Study Guides, Flashcards + More!
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