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Types of Useful Information
Fundamental Qualitative Characteristics
Enhancing Qualitative Characteristics
Accounting Assumptions
Other
100
how quickly a company can convert their assets into cash to met short-term obligations the company has as well as to cover current operating costs.
Liquidity
100
if omitting information or misstating it could influence decisions that users make on the basis of the financial information. Can be measured by nature, magnitude, or both
materiality
100
getting information to users in time to be capable of influencing their decisions
timeliness
100
National currency of company is used as stable unit of measure in preparing financial reports
monetary unit assumption
100
includes all information necessary for a user to understand the phenomenon being depicted, included all necessary descriptions and explanations (full disclosure)
complete information
200
a measure of profitability to stockholders' in comparison to their investment into the company
Return on investment
200
value if it can be used as an input to processes employed by users to predict future outcomes
predictive value
200
information is more useful if it can be compared with similar information about other entities and with similar information about the same entity for another period or date
comparability
200
information is reported and recorded for each separate legal and economic entity
Reporting entity assumption
200
information provided without bias in the selection or presentation.
neutral information
300
the unpredictability of what the future might bring the company.
Risk
300
provides feedback (confirms or changes) about previous evalutations
confirmatory value
300
using the same methods for the same items either from period to period within a reporting entity or in a single period across entities
consistency
300
Accounting systems assume that a business will continue to operate
continuity assumption
300
financial reporting should provide information about how efficiently and effectively the company's management and governing board have discharged their responsibilities to use the company's resources.
stewardship
400
how efficient a company is able to produce their goods or perform their services
operating capability
400
information that is capable of making a difference in the decisions made by users. Financial information is capable of making a difference if it has predictive value, confirmatory value or both
Relevance
400
classify, characterize and present information clearly and concisely so users who have a reasonable knowledge of business and economic activities and who review & analyze the information diligently can understand it even if they need to consult an adviser to understand complex economic phenomena
understanability
400
company is assumed to continue future operations, unless substantial contrary evidence exists and can be reasonably expected to operate long enough to realize economic benefits from its assets and satisfy its existing obligations
going concern assumption
400
used when accounting valuations are uncertain and alternative accounting valuations for assets or liabilities are equally possible. Convention that dictates that when in doubt, choose the solution that will be least likely to overstate assets and income
conservatism
500
a company has the financial capability to respond to unanticipated changes such as being able to handle an unexpected need or being able to take advantage of an unexpected opportunity.
Financial flexibility
500
information must match what really existed or happened. Financial statements give information users can use to estimate the value of the entity. The information must be complete, neutral and free from error
faithful representation
500
different knowledgeable and independent observers could reach consensus, although not necessarily in complete agreement, that a particular depiction is a faithful representation
verifiability
500
information is reported in a company's financial statements and to the SEC at least on an annual basis though most public companies must also file shorter quarterly reports.
period of time assumption
500
establishes a foundation of objectives and fundamental concepts, principles, and definitions that are the basis for the development of financial accounting and reporting guidance. Leads to high quality financial accounting standards and the appropriate application of those standards in accounting practice.
conceptual framework