The Frameworks

Question	Answer
Conceptual Framework	The Conceptual Framework is produced by the IASB (International Accounting Standards Board)
Conceptual Framework Elements of Financial Statements ASSETS	An asset is a resource controlled by an entity as a result of past events and from which future economic benefits are expected to flow to the entity.
Conceptual Framework Elements of Financial Statements LIABILITIES	A liability is a present liability of the entity arising from past events, the settlement of which is expected to outflow from the entity of resources embodying economic benefits
Conceptual Framework Elements of Financial Statements EQUITY	Equity is the residual interest in the assets of an entity after deducting all of its liabilities. EQUITY=NET ASSETS= SHARE CAPITAL + RESERVES
Conceptual Framework Elements of Financial Statements INCOME	Income is the increase of economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities, (that result in increases of equity- other than those relating to contributions from equity participants)
Conceptual Framework Elements of Financial Statements EXPENSES	Expenses are decreases in economic benefits using the accounting period in the form of outflows or depletions or assets or increases of liabilities (that result in decreases of equity- other than those relating to distributions of equity participants )
Conceptual Framework Underlying Assumption GOING CONCERN	FS are prepared on the basis that an entity will continue in operation for the foreseeable future, assuming that it neither intends to liquidate or curtail materially the scale of its operations. If such intention exist FS are prepared on a different basis which is disclosed
Conceptual Framework FUNDAMENTAL Qualitative Characteristics RELEVANCE	Relevant information is capable of making a difference in decisions made by users (Predictive or confirmatory Value) Information is material if omitting or misstating information could influence user's decisions
Conceptual Framework FUNDAMENTAL Qualitative Characteristics FAITHFUL REPRESENTATION	Information that is complete, neutral and free from error
Conceptual Framework ENHANCING Qualitative Characteristics COMPARABILITY	Consistent information that can be compared with similar information from other entities or from other periods
Conceptual Framework ENHANCING Qualitative Characteristics VERIFIABILITY	Assures users that the information faithfully represents the economic phenomenon it purports to represent
Conceptual Framework ENHANCING Qualitative Characteristics TIMELINESS	Having information available to decision makers in time to be capable of influencing their decisions
Conceptual Framework ENHANCING Qualitative Characteristics UNDERSTANDABILITY	Classifying, characterising and presenting information clearly and concisely
Accounting Standards Companies Act 2006	Provisions relating to formation, governance and administration of a company GAAP-National Accounting Procedures, Generally Accepted Accounting Procedures IAS's- International Accounting Standards IFRS's- International Financial Reporting Standards
Accounting Standards Purpose of Accounting Standards CREDIBILITY	Ensures Financial reports give a true and fair view of the company
Accounting Standards Purpose of Accounting Standards COMPARABILITY	By having FS prepared on a consistent basis, inter company comparisons can be made
Accounting Standards Purpose of Accounting Standards DISCIPLINE	Details on how transactions are recognised meaning less scope for manipulation, directors must ensure that FS give a true and fair view rather than presenting the company in a favourable view
Measurement basis HISTORICAL COST	Measured at the amount paid ON TRANSACTION DATE
Measurement Basis REALISABLE VALUE	Measured at the amount that could be obtained if that asset was sold or liability released TODAY
Measurement Basis CURRENT COST	Measured at amount that would be paid if transaction occurred TODAY
Measurement Basis PRESENT VALUE	Measured at the discounted value of future cash flows
ACCOUNTING EQUATION	ASSETS= EQUITY + LIABILITIES

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