It is clear that in scientific terms any knowledge of science is the cornerstone in understanding the science, as it is the common means of communication between all interested parties and specialists in any of the fields.
Because of what it represents terminology accounting basis is important in understanding the material accounting note and a career both in students (of researchers and students) or practitioners have (accountants working in the units of various economic), it has become necessary attention to this subject and given a large part of the research in an attempt to bridge the gap views between different writers initially up to the unification - as much as possible - to the full so that it becomes possible to avoid any confusion or variation when studying or use different accounting terminology.
Q1 : What is the conceptual frame work? And why it is needed
In financial reporting, a conceptual framework is a hypothesis of accounting set by a standard-setting body next to which sensible problems which can be tested neutrally. A conceptual framework deals with basic financial reporting issues such as the objectives and users of financial statements, the characteristics that make accounting information useful, the basic elements of financial statements (e.g., assets, liabilities, equity, income, and expenses), and the concepts for recognizing and measuring these elements in the financial statements.
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Benefits of a conceptual framework for financial reporting include: establishing precise definitions that facilitate discussion of accounting issues; providing guidance to accounting standard setters when developing and reviewing financial reporting rules; helping to ensure that accounting standards are internally consistent; helping preparers and auditors to resolve financial reporting problems in the absence of an accounting standard; and helping to limit the volume of accounting standards by providing an overarching theory of accounting that can be applied to specific reporting problems.
Why it is needed?
1 - Determine the outcome of the business of the profit or loss for a certain period of time.
2 - Determine the financial position in the period.
3 - Provision of data and information for planning and policy-making for the next period or periods.
4 - Provide data and information necessary to tighten control over the business and maintain their property loss of the manipulation and embezzlement.
5 - Keep complete records and a permanent organization for the financial actions carried out by a so you can refer to it when needed.
Q2: what are the objectives of financial reporting
is useful to existing and potential investors and creditors and other users in making rational investment, credit, and similar decisions;
helps existing and potential investors and creditors and other user to assess the amounts, timing, and uncertainty of potential net cash inflows to the enterprise;
Identifies the economic resources of an enterprise, the claims to those resources, and the effects that transactions, events, and circumstances have on those resources.
Q3 : What are the Accounting Principles and what are the qualitative characteristics?
Generally accepted accounting principles (GAAP) refer to the standard framework of guidelines for financial accounting used in any given jurisdiction; generally known as accounting standards or standard accounting practice. These include the standards, conventions, and rules that accountants follow in recording and summarizing and in the preparation of financial statements. . Accounting principles differ around the world, and countries usually have their own, slightly different, versions of GAAP.http://sqarra.files.wordpress.com/2008/06/123.jpg?w=450&h=345
Historical cost basis Principle means that you must calculate the value of assets and liabilities and reported in accordance with the acquisition price (on the process date)
Revenue Recognition Principle means that revenue should be recognized when:
* Realized or realizable.
* When earned
3. The principle of corresponding states interview efforts (expense) accomplishments (revenues) whenever the need arises
4. The principle of universal disclosure knows the size and nature of the information included in the financial reporting and reflecting judgment hard to compare things. Where the states to provides :
adequate disclosure of the things that make a difference to the different users of the lists, and taking into account
By making information understandable and the cost of preparation and use. Can find information on the financial status, income and cash flows and investment in one of the following places:
Always on Time
Marked to Standard
The financial statements,
The notes to the financial statements,
Lists the supplementary information or additional
Accounting information has relevance if it makes a difference in a decision.
Relevant information helps users forecast future events (predictive value), or it confirms or corrects prior expectations (feedback value).
Information must be available to decision makers before it loses its capacity to influence their decisions (timeliness).
Reliability: reliability of information means that the information is free of error and bias, in short, it can be depended on.
To be reliable, accounting information must be verifiable
Consistency: means that the same accounting principles and methods should be used from year to year within a company.
Comparability: Report should be comparable state with the passage of time and the comparison between enterprises, through the use of consistent accounting procedures.
Assumptions are traditions and customs, which have been developed over a period of time and well-accepted by the profession. Basic accounting assumptions provide a foundation for recording the transactions and preparing the financial statements there from. There are four basic assumptions that are considered as cornerstones of the foundation of accounting.
From the standpoint of accounting, each entity are treated as a separate unit from the owners and other facilities, she has her own moral Independent fully independent from its owner, regardless of its legal form. This represents a principle focus of attention, which is the accounting system. Each facility has therefore accounting records, and its accounting system to identify, measure, record, retain and communicate accounting information.To the owner's financial transactions not part of the property owned by him or prove in the accounting records for that property only if they have a direct impact on them.
Must use a formula understandable for users of accounting information when registering or Report that information, and this necessarily led to the concept of monetary union or measurement cash, which means that the financial accounting measure of resources (assets) and obligations (obligations) and changes the (income) in the form of units cash (SAR, USD, etc.) considering that the money is a unit of measurement to determine the appropriate module and report the effect of different processes
3. Going concern:
This means that the business will be operating non-predefined period, in other words, is the business of life no end date.
Continuity means that the facility was found to continue and established continuing operations for a period of time sufficient for completion of existing commitments, in the absence of objective evidence to the contrary. Consequently it is valuation of assets on the basis of historical cost and are ignored values ââ‚¬â€¹ââ‚¬â€¹of the liquidation of assets and liabilities and their effects on income, as well as the distinction between fixed assets and current assets and liabilities are short-term and long-term liabilities is a result of the application of the principle of continuity of the facility.
In order to measure the result of activity established (accounting unit) with complete precision it is required to wait until the liquidation of this property, which is not logical or practical given the urgent need for users of accounting information to know the result of the business first hand so that they can act in the light of a clear vision and make sound economic decisions. So life is divided established to periodically often (fiscal year) At the end of each period is measured as a result of the business through an interview expense for the period revenues for the same period, as is the preparation of the statement of financial position at the end of that period.