The Conceptual Framework Of Financial Statements

The conceptual framework is an attempt to provide a metatheoretical structure for financial accounting. SFAC No.3 defines 10 elements of financial statements. It is obviously a resolution of the definitions presented in the discussion mem for the conceptual framework project. Elements are what accounting professionals measure and the attributes is about how to measure. Definitions can be helpful to the financial statements which have been formulated in order to help professionals to specify the qualification are. Also, the definitions must be expressed in the metatheoretical structure.

Conceptual Framework helps the International Accounting Standards Board to develop criterion that are depend on consistent concepts. It helps prepares to

In September 2002 the IASB and the FASB agreed to work together, in consultation with other national and regional bodies, to remove the differences between international standards and US GAAP. (Dorata, 2008) However, the convergence of IFRS and FASB is coming to the end. (Golden, 2013)

The purpose of this paper is to define accounting, and identify the four basic financial statements. The paper also explains how the different financial statements are interrelated to each other and why they are useful to managers, investors, creditors, and employees.

The FASB accounting codification is an advanced system that allows certified public accountants and other users to quickly access non-SEC authoritative content, perform relevant research, and submit timely and appropriate feedback. The FASB codification research system is a real-time, online database that allows users to access codification whose primary aim is to simplify the accessibility and structure of all authoritative generally accepted accounting principles, reduce the time and effort invested when researching accounting-related issues, decrease the risk of non-compliance with the generally accepted accounting principles, provide access to all authoritative information from a single place, facilitate the updating of accounting standards, and foster research and convergence efforts for the FASB (Wiley, 2017).

1.In week one reading the reader will find out there is four primary financial statement balance sheet, income statement, statement of stockholder’s equity, and statement of cash flows.

In 2008, the Securities and Exchange Commission (SEC) issued a road map for the United States (US) to implement International Financial Reporting Standards (IFRS) that would eventually lead to the dissolution of US Generally Accepted Accounting Principles (US GAAP) (Cox 2008). US GAAP is rules based system of accounting that contains over 25,000 detailed pages of guidance, whereas IFRS is a principles based system of accounting that contains 2,500 pages of guidance. IFRS allows accountants to exercise professional judgment when making many decisions. This paper will compare and contrast US GAAP with IFRS on Intermediate Accounting Topics.

On July 1, 2009, after five years of development, the FASB introduced the online Accounting Standards Codification research system. The FASB’s development of the Codification intended to serve three main purposes. Theses purposes included simplifying the means by which a user accessed the GAAP coding, ensuring the accuracy of the authoritative GAAP codified content and establishing a research system that could easily be updated with the results of the latest standard-setting activity (Financial, 2014).

I - A. " Representational faithfulness is accomplished when transactions and events affecting the entity are presented in financial statements in a manner that is in agreement with the actual underlying transactions and events" (CICA, Financial statement Concepts 1000.21 (a), 2003). It means that all of information in the financial statement such as numbers and descriptions must be factual. The independent auditors checked the computer ID tags on each piece of equipment to confirm the actual numbers, and for that reason Byrn Company observes the representational faithfulness that is one of subsets of reliability.

Accountants, business owners, investors, creditors and employees use four basic financial statements of an organization to determine the financial well-being and future earnings potential of that organization. Financial statements are a key tool in seeing and understanding the past, present and future condition of an organization. What are these financial statements and what do they mean to the reader? Do the financial statements mean something completely different to an investor, creditor, and employee?

Financial statements have several key components and specific criteria into them to relay the detailed information for auditors and management. A deeper look into financial statements and the many concepts surrounding them are needed to explain in more detail. It’s also important to recognize the Auditor’s opinion letter, balance sheet, operating statement, statement of changes in net assets, and statement of cash flows and footnotes of their involvement in the process. Relevant accounting articles are a useful supplement to financial statements and how they enhance concepts in the financial statement. The meaningful uses of financial statements for health care organizations are the epitome of current and future success of financial health.

The accounting world is shaped by stringent and clear rules, principles, standards and guidelines. These are all meant to define accounting operations and reporting discipline. With the emergence of International Accounting Standards (IAS), which was later replaced by International Financial Reporting Standards (IFRS), the accounting concepts, analysis, disclosures, reporting and presentation became easier and practical. Currently, accountants, managers and related parties find it concrete and consistent in protecting professional boundaries.

So, the benefit behind the conceptual framework is increasing users’ understanding of financial reporting. Second, IASB cannot be alone without the implementation of IFRS. Also, IASB made it easy for companies to compare financial statements due to the procedural of IASB. However, it will enable auditors to quickly resolve financial reporting problems by referring to an existing framework. Third, the reason where IASB framework, developing future accounting standards. Through, globalization accounting becomes an international language, it allowed a lot of investment opportunities and trading internationally. Fourth, understandable information about financial statements for users.

Financial Statements basically show the historical performance or record of the company at some previous point of time. By the time when financial statements are made public, changes are many economical areas such as market conditions, currency exchange rate and inflations can change the values of assets and liabilities. In this case there often exist discrepancies between book value of assets and their market values.

The Purpose of Financial Statements The financial statements of a business are used to provide information about the status of the business, set performance targets and impose restrictions on the managers of the firm as well as provide an easier method for financial planning. The financial statements consist of the Profit and Loss Account, Balance Sheet and the Cash Flow Statement. There are four areas of information, which we can collect from a company's financial statements. They are: Ÿ