CFAS reviewer

• Statement of Financial Position


  Financial statement that provides information about the financial performance based on accrual accounting
• Relevant

  Information that is capable of making a difference in a decision
• Equity


  The residual interest in the assets of the entity after deducting all of the liabilities
• Understandability


  Information should be understood by those who have a reasonable understanding of business and economic activities
• Recognition principle Only items that meet the definition of an asset, liability, equity, income and expenses.
• Comparability


  Information is measured and reported in a similar fashion across entities
• Revenue recognition


  Revenue from sale of goods is recognized at appropriate points throughout the operating cycle
• Understandability requires that users have a reasonable knowledge of business and economic activities
• Recognition


  The process of capturing for inclusion in the statement of financial position or the statement of financial performance an item that meets the definition of an element of the financial statements
• Fundamental qualitative characteristics of accounting information

  • Faithful representation
  • Relevance
• Matching principle


  Implies a cause and effect relationship
• Derecognition occurs when an item no longer meets the definition of an asset or a liability, the entity loses control of the asset, or the entity no longer has a present obligation for the liability
• An expenditure should be recorded as an asset rather than an expense when there is a right that has the potential to produce economic benefit
• Faithful representation


  Includes completeness, free from error and neutrality
• Cost-benefit constraint


  The benefit of the information must be greater than the cost of providing it
• Recognition of an element is appropriate when information results in both relevance and faithful representation
• Measurement basis


  The most common is historical cost
• Consistency


  Information is measured and reported in a similar fashion across time for the same entity
• When product costs are recognized as expense

  In the period when the expenses are incurred
• Recognition of an element


  When information results in relevance and faithful representation
• Consistency in financial accounting information


  Information is measured and reported in a similar fashion across points in time
• Distinction between revenue and gain


  The nature of the activity that gives rise to the transaction
• Income


  Includes gain resulting from sale of an asset in an arm's length transaction
• Inflation is ignored in accounting due to money measurement assumption
• Overall objective of financial reporting


  To provide information that is useful for decision making
• Attributes that make information in the financial statements useful

  Qualitative characteristics of financial information
• Reporting entity


  An entity that is required or chooses to prepare financial statements
• Basic accounting concept for producing financial statements at arbitrary points in time

  Time period assumption
• Assumption that an entity will not be sold or liquidated in the near future

  Going concern assumption
• Enhancing qualitative characteristics of accounting information

  Comparability, understandability, timeliness and verifiability
• Qualitative characteristic of relevance


  Predictive value and confirmatory value
• The Conceptual Framework has 8 chapters
• Current value


  Fair value, value in use, fulfillment value and current cost
• Financial statement that provides information about changes in entity's economic resources and claims not resulting from financial performance

  Statement of Changes in Equity
• Financial statement that provides information about the financial performance based on past cash flows

  Statement of Cash Flows
• Assumption that justifies the usage of accruals and deferrals

  Time period
• Accounting concept associated with the assumption that the company will continue long enough to carry out its objectives and commitments

  Going concern
• Materiality

  An item must make a difference or it need not be disclose , An item is material if omitting, misstating or obscuring it could reasonably be expected to influence the economic decision of primary users and materiality is a subquality of relevance.
• Purpose of revised conceptual frameworks

  To assist the IASB to develop IFRS based on consistent concepts, to assist preparers to develop consistent accounting policy when no standard applies to a particular transaction or when Standard allows a choice of accounting policy and to assist all parties to understand and interpret the Standards.
• Income and expenses

  Income is increase in asset or decrease in liability that results in increase in equity other than that relating to contribution from equity holders, Expense is decrease in asset or increase in liability that results in decrease in equity other than that relating to distribution to equity holders,

  income encompasses revenue and gain.