Basics

• Environment of Accounting
  Assumptions
  1. Economic Entity
  2. Going Concern
  3. Unit-of-Measure
  4. Periodic
• Financial Statement Element
  • Assets
  • Liabilities
  • Owners' Equity
• Objective of SFAC

  The Statements of Financial Accounting Concepts are intended to establish the objectives and concepts for use in developing standards of financial accounting and reporting.

• Objective of Financial Reporting
• Qualitative Characteristics(SFAC 2)
  1. Usefulness of Accounting Information
     1. Relevance
        1. Timeliness
        2. Predictive Value
        3. Feedback Value
     2. Reliability
        1. Representational Faithfulness
        2. Verifiability
        3. Neutrarity
  Characteristics of Assets
  1. It embodies a probable future benefit that involves a capacity to contribute to future net cash flow.
  2. A particular entity can obtain the benefit and control others' access to it.
  3. The transaction or other event giving rise to the entity's right to or control of the benefit has already occured.
• Comprehensive Income

  Comprehensive Income includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.

• Accrual Accounting Concept

  [SFAC 6] The discription of a cost cannot be directly related to particular revenue,but it is incurred.

  • salesmen's mounthly salaries

• Authority Pronouncement
  GAAP Hierarchy
  1. • FASB Statement and Interpresentations
     • APB Opinions
     • AICPA Research Bulletins
  2. • FASB Technical Bulletins
     • AICPA Industry Audit and Accounting Guide
     • AICPA Statements of Position cleared by the FASB
  3. • Consensus positions of the FASB's EITF
     • AcSEC Practice Bulletins
  4. • AICPA accounting interpretations
  5. • FASB Concepts Statements
     • APB Statements
     • AICPA Issues Papers