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CONCEPTUAL
FRAMEWORK
ABDUL AZIZ BIN MOHD TALIb
MOHD SOLIHIN BIN MOHD SOBRI
(M1310706-14)
(M1310707-14)
LEARNING OBJECTIVE
1) To understand what is conceptual
framework
2) To understand the objective, elements
and qualitative characteristics of
financial reporting
3) To understand the structure of an
accounting theory that contains
theoretical concept of accounting, matching
principal, objectivity principle, full disclosure
principle, conservatism principle, materiality
principle, and uniformity and comparability
principle.
TI
VE
S
OB
JE
C
Exhibit 6.3 ; pg 53
CONCEPTUAL FRAMEWOR
DI
SP
LA
Y
OP
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AT
IO
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L
FU
L ND
AM
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Objecti
ves Qualitative
Elements SFAC
SFAC
Nos 3 and 6 Nos 1
characteristics
and 4
SFAC No 2
Recognition Financial
Measurement
criteria
Statements
SFAC No 33
versus
(Experimental)
SFAC No 5
Financial Reporting
Reporting
Earnings
SFAC No. 6
Reporting Fund
Flow and Liquidity
Reporting
Financial
Position
business enterprises
1.
Users of
accounting
information
Pervasive
constrain
tUser-specific
qualities
Decision usefulness
Primary
decision-specific Relevance
qualities
Reliability
Representation
al
faithfulness
Neutralit
y
Timeliness
Ingredient
s of
Predictive
primary
value
qualities
Secondary and
interactive qualities
Threshold for
recognition
Verifiabilit
y
Feedbac
k value
Comparability
(including consistency)
Materialit
y
Cont
Relevance
Must bear on or be usefully associated with the action it is
designed to facilitate or the result it is desired to produce.
Either the information or act of communicating exert influence on
the designated actions.
Verifiability
Attribute which allows qualified individuals working independent of
one another to develop essentially similar measures or conclusion
from an examination of the same evidence data or records.
Verifiable information substantially reproduced by independent
measurers using the same measurement methods.
Representation faithfulness and completeness
The correspondence between accounting data and events those
data are supposed to represent.
Cont.
Neutrality
2b. The
theoretical
concept of
accounting
3. The principles of
accounting
4. The accounting
techniques
Cont..
1. Direct matching of expired costs with a
related sale )
2. Direct matching of expired cost with the
(ex: depreciation )
4. Expensing all other costs in the period
expenses )
by different firms