Ch 2: Financial Reporting Theory

make sure to write HW question on test

what is conceptual framework ?

A set of objectives and fundamentals (concepts, and Principles) that ensure that accounting standards are coherent and uniform

why is conceptual framework needed ?

to help accounting standard setters develop and revise the standards so that they are consistent

does the conceptual framework override accounting standards

NOO

what is the qualitative objective of financial reporting ?

to put characteristics that would make accounting info USEFUL

what is the overall objective with financial reporting ?

to privide financial information about the reporting entitity that is. IT is meant to be useful to investors in makign decision

does financial accounting use accrual accounting or cash accounting ?

Accrual

what does the cash basis of accounting do ?

recognizes revenues when cash is received and expense when CASH IS PAID