financial position

'-

performance (profitability)

'
""" provide information

Operating
Investing \

OBJECTIVE OF F/S

changes in fin position

'

Financing

Accrual basis
Going concern basis

'a stmn of generally accepted theoretical principles which form the frame of reference for financial
reporting'

(
standardising accounting practice

UNDERLYING ASSUMPTION

ADV (
r

policies will be less open to criticism-> lesser political interference from interested parties

\.. std may concentrate -> inc. stmn I valuation of net assets
may not suits the variety users of f/s

Understandability
DISADV (
l

Relevance

'

Faithful representation

J
Neutrality
Completeness J

Substance over form

diversity of user requirement-> may need for a variety acctg std, each for diff. purpose1
with diff. concept as a basis
unclear

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Conceptual Framework for the development of IFRSs/IASs

->determines how the tis are prepared and the info they contained

Comparability )

develop future IASs

assist Board of IASB /
\. review existing IASs

Relevant vs Reliable )
True & fair view

assis Board of IASB - promote harmonisation in preparing f/s

(reduce alt treatment allowed by IASs)

CONCEPTUALFRAMEWOR~

assist national std-setting bodies - develop national stc

PURPOSE
(
Assets

apply IASs
assist preparers of f/s /
\. deal wif topic not yet dealt by IAS1
'" assist auditors -form opinion-> f/s conform wif IA~
assist users - interpret info in tis in conformity wif IAS!

Liabilities

FIN POSITION (B/S

ELEMENTS OF F/l

\Q

provide info to those interested wif IASB's work- approach

\ to d formulation of IASs (now IFRSs)

IASB's FRAMEWOR~

Equity

objective of tis
Income
Expenses

f
""\ PERFORMANCE (l/S

qualitative characteristics - usefulness of info in tis

f def, recognition & measurement of d elements of tis

f concepts of capital maintenance

1. Investors
{ 2. Employees

SCOPE j
Probability of future econ. benefits ""\ RECOGNITION OF ELEMENTS OF I)
Reliability of measurement f

,
users n d info need

4. Suppliers
1..

Realisable (settlement) value

5. Customers

'" 6. Government

Historical cost
Current cost

3. Lenders

7. Public at large
' MEASUREMENT OF ELEMENTS OF FJ
j

Present value of future cash flows

FAIR PRESENTATION & COMPLIANCE WITH IF)