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48 Cards in this Set
- Front
- Back
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Basic notions or fundamental premises on which the acctg process is based |
Accounting assumption |
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Accounting assumption is also known as |
Postulates |
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Serve as the foundation or bedrock of acctg to avoid misunderstandings but rather enhance the usefulness of the FS |
Accounting assumption |
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Conceptual Framework for Financial Reporting mentions only one assumption |
Going concern |
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4 basic assumptions |
Going concern Accounting entity Time period Monetary unit |
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In he absence of evidence in the contrary, the acctg entity is viewed as as continuing in operation indefinitely |
Going concern assumptiom |
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Assets in going concern are recorded at blank and market values are ignored |
Cost |
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Going concern is the very foundation of |
Cost principle |
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Going concern is also known as |
Continuity assumption |
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Specific bus. Org. Which may be a proprietorship, partnership and corporation |
Accounting entity |
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Entity is separate from its owners, managers and employees |
Acctg entity |
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Reason for the entity assumption |
FAir presentation in FS |
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Each business in an independent accounting entity |
True |
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Consolidated statement for the affiliates are made for practical and economic purposes |
Single economic entity |
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The indefinite life of an entity is subdivided into time periods or accounting usually of equal length |
Time period assumption |
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One year or a period of twelve months |
Fiscal period |
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Twelve month period that ends on dec. 31 |
Calendar year |
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Twelve month period that ends on any month when the bus is at lowest or experiencing slack season |
Natural business year |
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Two aspects of monetary unit assumption |
Quantifiability Stability of the peso |
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A, L, C, I, E should be stated in terms of unit of measure which is the |
Quantifiabilty aspect Peso in the Phils. |
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Purchasing power of the peso is stable or constant |
Stability of the peso assumption |
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Amplification of the going concern assumption so that adjustments are unnecessary to reflect any changes in purchasing power |
Stable peso postulate |
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Complete comprehensive and single document promulgated by the IASB |
Conceptual framework |
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Summary of the terms and concepts that underlie the preparation and presentation of FS |
Conceptual Framework |
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Conceptual framework is an attempt to provide an overall |
Theoretical foundation |
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Underlying theory for the development and revision of acctg standards |
Conceptual framework |
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Special purpose of financial reports are outside the scope of conceptual framework |
True |
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Purpose of conceptual framework |
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In the absence of a standard or an interpretation management shall consider the |
Conceptual framework |
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Conceptual framework is not a PFRS |
True |
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2 classifications of users of FS |
Primary users Other users |
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Include the existing and potential investors, lenders and other creditors |
Primary users |
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Include employee, customers, government, agencies and the public |
Other users |
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Parties to whom general purpose financial reports are primarily directed |
Primary users |
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Concerned with the risk inherent in and return provided by the investment |
Investors |
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Need info whether to buy hold or sell |
Investors |
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Need info that enables them to assess the stability of the entity |
Shareholders |
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Interested in info w/c enables them to determine whether their loans, interest therein and other amts owning to them will be paid when due |
Lenders and other creditors |
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Parties that may find the general purpose financial reports useful but the reports are not directed towards them |
Other users |
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Interested in info w/c enables them to assess the ability of he entity to provide renumeration, retirement benefits and employment opportunities |
Employees |
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Info. About the continuance of an entity especially when they have a long term involvement |
Customers |
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Interested in the allocation of resources and the acrivities of the entity |
Govt and their agencies |
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Provide info about the trend and range of its activities |
Public |
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Scope of conceptual framework |
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Provision of financial info. About an entity to external users that is useful to them in making economic decisions and for assessing the effectiveness of the entity's management |
Financial reporting |
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Principal way of providing financial info to external users |
Annual financial statements |
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Provide financial info about the reporting entity that is useful to existing and potential investors, lenders and creditors in making decisions about providing resources to the entity |
Overall objective of financial reporting |
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Why, purpose or goal of accoutning |
Objective of financial reporting |
