Accounting

CFAS 2-7

Conceptual Framework - by IAS; summary of terms, theoretical foundation, guide standard-setters, prepares and users of FS.
-transparency, accountability and economic efficiency

*Nothing in the CF overrides any specific IFRS.

Primary Users (Target Users)
-existing and potential investors, lenders and other creditors.

Other Users
-employees, customers, governments, agencies and public.

Financial reporting is the 'why' or purpose of accounting

Management Stewardship
-how efficiently and effectively management had dischard its responsibilities.

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Qualitative Characteristics - attributes that make financial accounting info useful to users.

>Fundamental Qualitative Characteristics - content of financial info

-Relevance (Predictive and Confirmatory Value)
-Faithful Representation (Completeness, Neutrality and Free from Error)

>Enhancing Qualitative - presentation of financial info

-Veriability, Comparability, Understandibility and Timeliness.

*Substance over form
*Cost Constraint - judgement process

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Financial Statements - info about economic resources, claims agains entity and changes in resources and claims.

-Financial Position (A,L,OE)
-Financial Performance (I,E)
-Notes

Types of FS

1. Consolidated - both parent and subsidiaries
2. Unconsolidated - parent alone
3. Combined - not linked by parent and subsidiary relationship

Underlying Assumption - Going concern (forseeable future)
-Accounting Entity (separate from owners
-Time Period (Calendar, fiscal, interim and natural business year)
-Monetary Unit (quantifiability and stability of peso

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Elements of Financial Statements
-Asset
-Liability
-Capital
-Income
-Expense

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Recognition - meets the definition (CA - A,L,E)

*Point of Sale - income recognized when earned

*Expense Recognition - when incurred (Matching Principle)

-Cause ane Effect (matching of cost with revenue
-Systematic and Rational Allocation (costs are expensed by allocatinf them over the periods benefited)
-Immediate Recognition (expensed outright)

Derecognition - removal of recognized assets or liabilities

Measurement
a. Historical
b. Current Value - fair value, value in use for asset, fulfillment value for liablity and current cost

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Capital Maintenance
1. Transaction approach - traditional way
2. Capital Maintenance - net income occurs only after the capital used from beginning is maintained.
2A. Financial Capital - Historical cost; monetary amount
2B. Physical Capital - Current cost; Quantitative measure

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