Focus on: Basic Concepts—Module 9
OBJECTIVES OF FINANCIAL REPORTING
The objectives of financial reporting are to provide:
- Information that is useful to potential and existing investors, lenders, and other creditors
- Information about the reporting entity’s economic resources and claims against those resources
- Changes in economic resources and claims
- Financial performance reflected by accrual accounting
- Financial performance reflected by past cash flow
- Changes in economic resources and claims not resulting from financial performance
Financial statements are designed to meet the objectives of financial reporting:
Balance Sheet | Direct Information | Financial Position |
Statement of Earnings and Comprehensive Income | Direct Information | Entity Performance |
Statement of Cash Flows | Direct Information | Entity Cash Flows |
Financial Statements Taken as a Whole | Indirect Information | Management and Performance |
Qualitative Characteristics of Accounting Information
IFRS® and U.S. Conceptual Framework as Converged
Fundamental Characteristics/Decision Usefulness | Enhancing Characteristics |
Relevance | Comparability |
Predictive value |
Verifiability |
Feedback value |
Timeliness |
Materiality |
Understandability |
Faithful Representation | Constraints |
Completeness |
Benefit versus costs |
Neutrality |
|
Free from error |
Elements of Financial Statements
IFRS Elements
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