The Conceptual Framework Of Financial Information

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The conceptual framework is used to outline potential courses of action or to present an ideal approach to an idea or thought. The framework describes basic concepts that underline the preparation and presentation of financial statements for external users. Qualitative characteristics of financial information are discussed in the conceptual framework of the standard setter, to whose work they are essential. If financial information is to be useful, it must be relevant and faithfully represent what it purports to represent. Accounting standards have up to 35 sections applicable to the UK and Ireland. These sections, each address a specific area of accounting. The consolidated financial statements of listed groups are required by the IAS regulation to be prepared under EU-adopted IFRSs. However, qualitative characteristic are also important in the context of the choice and change of accounting policies by firms, there are various qualitative characteristics of useful financial information and they are Relevance Materiality, Faithful representation, Comparability, Verifiability, Understandability, and Timeliness. Although they are all important for financial information they are a few that must be considered very important. There are different users of this framework and they have different reasons as to why they need information from the financial statement. • Customers; they have an interest in the progress of an organisation, especially when they have a long term
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