Road Map to Understanding the Conceptual Framework

GOAL!

Level 3 = Recognition, Measurement, and Disclosure

Constraint

Co$t!!

Level 3 = Recognition, Measurement, and Disclosure

Measurement

Principles

Revenue recognition

Full Disclosure

Expense Recognition

Level 3 = Recognition, Measurement, and Disclosure

Assumptions

Road Map to Understanding

the Conceptual Framework

Economic Entity

Going Concern

Monetary Unit

Periodicity

level 2 = Fundamental Concepts

Elements

equity

liabilities

assets

losses

investment

by

owners

gains

expenses

distribution

to

owners

revenues

comprehensive income

Level 2= Fundamental Concepts

Qualitative Characteristics

Enhancing qualities

Fundamental Qualities

-Comparability

-Verifiability

-Timeliness

-Understandability

• RELEVANCE

-Predictive value

-Confirmatory value

-Materiality

• RELIABILITY/ FAITHFUL REPRESENTATION

-Comparability

-Neutrality

-Free from error

Level 1= Objective

by Toni-Kae Watson-Grant

To provide financial information about the reporting entity to be utilized by business owners, auditors, lenders, investors, creditors, and all other capital providers.

Welcome!

This map gives quick and easy insight into understanding the three levels of the conceptual framework. Buckle your seat belt, and try not to get left behind! (speeds up to 3 levels per hour)