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Summary the conceptual framework 2010
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this is the summary of all the important points you need to know for exam in accounting studying towards to be a CA
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Accounting 100 notesConceptual framework 2010
Accrual accounting
The nature of accrual accounting
• According to the accrual accounting, the effect of transactions that are incurred
on credit, are recorded in the accounting records when the transaction or event
is incurred and not only at the point in time when settled.
Going on concern – underlying assumption
• An entity is accepted as a going on concern
• An entity prepares financial statements on the assumption thar the entity will
continue to be in operation for the foreseeable future (12 month period after
reporting date)
Users of financial statements
The conceptual framework 2010 distinguishes between:
Primary users (main users) Other users
• Potential investors • Government
• Lenders • Government institutions
• Other payables • Members of the public
▪ The management of an entity is also interested in the financial statements but
they do not need to rely on the general-purpose financial statements, since they
can obtain the information internally
Qualitative characteristics
fundamental enhancing
▪ Relevance ▪ Comparability
-Has characteristics of -the information of the entity and
confirmatory and predictive other entities enhances the
value usefulness of information
- Materiality plays a role because the information is
▪ Faithful representation always compared
Complete representation -Consistency plays a role
-includes information necessary for a ▪ Verifiability
user to understand the phenomena -provides assurance to users
that represented. about information that is in a
faithful manner
Neutral representation ▪ Timeliness
-is without bias in the selection and -means to have information
presentation of financial information. available on time so that the
information can influence the
Free from error decision of the users on time.
-Means there are no errors or ▪ Understandability
omissions
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