Individual Assignment 1
1. Explain 8 levels of conceptual framework
Level| Elements| Explanation|
1.Border of discipline / authority| * Definition of financial reporting| It defines the financial record of the business activities.| 2. Subject| * Definition of the reporting entity| It defines the reporting entities where the users are dependent on their financial statements to make decision.| 3. Objective| * Objective| It is something toward which effort is directed.| 4-5. Fundamentals| * Qualitative Characteristic * Elements| It is the basic concepts underlying the measurement of transactions and events and disclosing them in a manner meaningful to users of accounting information.| 6-8 Operational| * Basic of recognition * Basic of measurement * Techniques of measurement| It explains how a company should recognize, measure and report financial elements and events.| 9-12. Displays| * Financial position * Performance * Changes in financial position * Compliance| It displays the content that should be inserted in financial statements and whether it is in accordance with the setting standards.| 13-17. Standard-setting policy| * Applicability * Elevation * Research methodology * Requirement for audit * Policies re-transition| It is the standards which must be adhere by the entities whose are issuing the financial statements.| 18-19. Enforcement| * Monitoring compliance * Responses to non-compliance| It enforces the standards that had been set and monitors whether the entities are compliant to it or not.|
2. What is conceptual framework?
Conceptual framework is a coherent system of interrelated objectives and fundamentals that is expected to lead consistent standards and that prescribes the nature, function and limits of financial accounting and reporting.
3. What are qualitative characteristics of financial information?