Study Unit 1

Conceptual framework
 Unit specific learning outcomes

At the end of the unit after studying the pages and exercises as indicated
on the work program you will be able to:

• Identify, name and discuss the users of financial statements.

• Discuss the objective of financial statements
• Define the different elements of financial statements as indicated in the Conceptual Framework
• Apply the definitions and elements of financial statements and identify given items as assets,
liabilities, income or expenses.
• Apply the theory in discussion questions

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 Unit-specific Chapter 1 in the prescribed
textbook (pages 3-24 and
Study Material questions indicated on
work program)

2018 Conceptual framework

Practical Questions in the

study guide for unit 1

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Conceptual framework

The objective of general-purpose financial reporting.

Qualitative characteristics of useful financial information.

Financial statements and reporting entity

Elements of financial statements.

Recognition and derecognition.

Measurement

Presentation and disclosure

Concepts of capital and capital maintenance.

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 The objective of general-purpose financial reporting.

• Provide financial information about the reporting entity that is useful

to existing and potential investors, lenders and other creditors.

• For the purpose of making decisions relating to providing resources

to the entity.

Paragraph 1.1.6 in the prescribed textbook

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 Qualitative characteristics of useful financial information.

FUNDAMENTAL CHARACTERSITICS

• Relevance: information is relevant if is capable of influencing the decisions made by

users. Information is further considered capable of influencing decisions if it has predictive
value,confirmatory value or both.

• Faithful representation: requires that financial reports not only represent relevant
transactions and other events, but faithfully represent the transactions and other events
that it purports to represent.

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 Qualitative characteristics of useful financial
information.
Enhancing qualitative characteristics

• Comparability

• Verifiability

• Timeliness

• Understandability

paragraph 1.3.2 , Introduction to financial accounting.

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 General features for presentation of financial
statements
• Fair presentation and compliance with IFRSs

• Going concern

• Accrual basis of accounting

• Materiality and aggregation

• Offsetting

• Frequency of reporting

• Comparative information

• Consistency of presentation

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Paragraph 1.11 Introduction to financial accounting.
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Users of financial statements.

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QUESTIONS ?

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