Professional Documents
Culture Documents
Cfas
Cfas
Balance Sheet
Predict enterprise’s ability to generate cash and cash equivalents in the future
Assess the entity’s liquidity and solvency as well as its need to additional financing and how
successful it is likely to be obtaining that financing
Predicting future borrowing needs and how future profits and cash flows will be distributed
among those with interest in the enterprise
Predicting the ability of the enterprise to meet its financial commitments as they fall due
3. Changes in the entity’s economic resources and claims not resulting from financial performance
Changes in market prices or interest rates that affect the entity’s ability to generate net cash
inflows
Completely understand why the entity’s economic resources and claims changed and the
implications of these changes for its financial performance
QUALITATIVE CHARACTERISTICS OF USEFUL FINANCIAL INFORMATION
I. FUNDAMENTAL
Confirm earlier expectations about the enterprise, thus, allowing users to better
understand how past economic activities have affected the enterprise
b. Predictive Value
c. Materiality
2. Faithful representation – requires that the amounts and descriptions of information presented in the
financial statements reflect the actual results of the transactions completed by the enterprise
a. Completeness
b. Neutrality
II. ENHANCING
1. Verifiability
2. Comparability
Identify similarities and differences between at least two sets of economic
circumstances
3. Understandability
4. Timeliness