Conceptual Framework

The cash basis of accounting records revenues when cash is received and expenses when cash is paid out. The accrual basis of accounting records revenues when they are earned and expenses when resources are used.

Boundless (2015) said that a Conceptual Framework can be defined as a system of concepts and purposes that guide to the creation of a constant set of regulations and standards. Especially in accounting, the rule and standards set by the nature, function and limit of financial accounting and financial statements. IFRS(2015) stated that the purpose of the Conceptual framework is to enhance financial reporting and objective of accounting by offering a more accomplish, clear and updated set of concepts or guidelines. In Conceptual Framework, it will form a basis for define how transactions should be calculated (historical value or market value) and reported in financial report like how they are presented or communicated to internal or external users. To carry out this, the International Accounting Standards Board (IASB) is establishing on the currently existing Conceptual Framework updating it, enhancing it and padding it in the disparity instead of essentially reconsidering all respects of the Conceptual Framework.

A change in one statement would affect the others. It is concluded the financial statements do have an interrelationship with each other and they must be understood with their interrelationship in order to be properly interpreted. The order should be to first the income statement, then the balance sheet, Retained Earnings Statement and finally the Statement of Cash Flows.

Financial statements provide financial decision makers with varied information presented in specific formats that is easily attainable tools to evaluate financial health. Three of the necessary financial statements are the statement of financial position or the balance sheet, operating statement also called income statement, and the statement of cash flows (Finkler, Jones, and Kovner, 2013).

Understanding the finances of a company is important but knowing the significance of the financial statements is crucial to the operations as well. Reviewing the statement of financial position, operating statement and statement of cash flows serve as a guidance to management and executives on the day-to-day activities of an organization (Finkler et al., 2013). For example, the statement of financial position (balance sheet) shows the assets and

This research project will inform the reader of the difference between the United States accounting standards and International accounting standards. The United States uses the Financial Accounting Standards Board (FASB) to issue financial reporting procedures. The International Financial Reporting Standards (IFRS) are issued by the International Accounting Standards Board (IASB). There are proposals for the United States to adopt the International standards. Financial reporting procedures are debated about the United States using the Generally Accepted Accounting Procedures (GAAP) or following the global procedures. This

Financial reports consist of a statement of financial position, statement of comprehensive income, statement of changes in equity, statement of cash flows, notes, directors' declaration, directors' report and the auditor's report. The financial statements need to be prepared in accordance with applicable accounting standards, making the necessary disclosures in order to be transparent and fully inform readers about the activities and financial situation of the entity.

This case study presents the use of Object Relations Theory. Object Relations Theory is the relation between the internalized sense of self and others, and how it affects present relationships.

The assumptions formed in preparation for executing the pro forma balance sheets and income statements are important because they are being used to determine whether or not your endeavors are worthwhile. Identifying important trends within the assumptions will help to give you a better idea of the market value of your

An assumption inherent in an enterprise 's statement of financial position prepared in accordance with generally accepted accounting principles is that the reported amounts of assets and liabilities will be recovered and settled, respectively. Based on that assumption, a difference between the tax basis of an asset or a liability and its reported amount in the statement of

Q. Expressing financial data as if a business will continue operating for an indefinite period time refers to which concept? a. Business entity concept b. Going concern concept c. Objectivity concept d. Adequate disclosure concept ANS:

The “financial statements are formal reports providing information on a company's financial position, cash inflows and outflows, and the results of operations” (Hermanson, p.22). There are four main components that make up a financial statement. The four parts are, balance sheet, income statements, cash flow and, statement of owner’s equity. The balance sheets role is to define the company’s assets liabilities and revenue of the business. The income statement shows the income within the company. Cash flow reviews the position of the company by cash payments and receipts. Lastly, the statement of owner’s equity shows the amount of earnings, stock and other capitals of people in the company. (Hermanson, p.34-35).

Accrual accounting shows outcome of transactions and other events such as assets and liabilities of entity 's in such a periods in which effects occur even if cash is paid or received in a different time.

The board acknowledges the diverse nature of regulatory framework in developing concrete and uniform standards. These standards help in proposing and clarifying a complete guidance as well as demonstrating the understanding of complex issues in accounting. Moreover, help in demonstrating advanced knowledge in the application of accounting standards in the preparation and analysis of financial statements.

The Financial Reporting Council (FRC) has recently released four new standards: FRS 100 Application of Financial Reporting Requirements; FRS 101 Reduced Disclosure Framework; FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland; and FRS 103 Insurance Contacts. FRS 100 basically describes who does what with the new UK GAAP. It describes which principles apply to which type of business; when a business can apply the reduced disclosure framework; and when a business should follow a statement of recommended practices, or SORP. FRS 101 lays out a reduced disclosure framework for entities. Certain entities can choose to use this reduced disclosure framework while creating their financial statements. FRS 102