FAR Standards & Conceptual Framework

Question 1

What does Faithful representation include in financial information

Answer 1

For information to be useful, it must faithfully represent the reported economic phenomena.

1. Neutrality
2. Completeness and
3. Free from Error

Question 2

What does relevance include in financial information

Answer 2

Information is relevant if it is capable of making a difference in the decisions made by USERS.

1. Predictive value
2. Confirming Value and
3. Material

Question 3

What is the use of the Statement of Financial Accounting Concept (SFAC)

Answer 3

They serve as the basis for all FASB pronouncements. SFAC are not GAAP, but they provide a basis for financial accounting concepts for business and non-business entities

Question 4

What are the Enhancing Qualitative characteristics of Financial information (ie compare and verify in time to understand)

Answer 4

1. Comparability
2. Verifiability
3. Timeliness
4. Understandability