Conceptual framework of financial information chapter 2

Conceptual framework of financial information chapter 2

1. objetive of financial information

   • generate and communicate useful information of a quantitative type for the timely decision-making of the different external users of an economic organization.

2. features

   • utility, understanding by this the adaptation to the needs of the users.
     • reliability
     • relevance
       • veracity, representativeness, objectivity, verifiability, information sufficient, predictability and confirmation, and relative importance
     • understandability
     • comparability

3. Basic postulates regarding the economic entity

   • Economic substance
     • refers to the fact that in the operation of the financial information system and in the transactions or economic events that affect an entity
   • Entity
     • indicates that the operations and financial information of an economic organization are independent of those of its shareholders, creditors, debtors, sponsors and any other organization.
   • Going business
     • assume that the permanence of an economic organization in the market will have no limit o! n, with the exception of entities in liquidation

4. concepts

   • Active
     • Economic resource owned by an entity, which is expected to yield benefits in the future.
   • Passive
     • What the business owes to other known persons or entities as creditors
   • Capital
     • The contribution of the owners known as shareholders.
   • Income
     • The resources that the business receives from the sale of a service or product, in cash or on credit.
   • Expenses
     • They are assets that have been used or consumed in the business, in order to earn income

5. financial statements

   • The income statement
     • which reports on the profitability of the operation.
   • The statement of changes in stockholders' equity
     • whose objective is to show the changes in the investment of the owners of the company.
   • The statement of financial position or balance sheet
     • whose purpose is to present a list of resources (assets) of the company, as well as the sources of financing (liabilities and capital) of those resources.
   • The cash flow statement
     • cuyo objetivo es dar información acerca de la liquidez del negocio

6. independent auditor´s opinion

   • The opinion is the final result of a review (audit) of the information contained in the financial statements.

7. financial statement notes

   • con ellas se pretende explicar con mayor detalle situaciones especiales que afectan ciertas partidas dentro de los estados !nancieros. Las notas deben presentarse en forma clara, ordenada y referenciada para facilitar su identi!cación.

8. Basic postulates that establish the bases for the accounting recognition of operations and events with an impact on the entity

   • Accounting accrual
     • the effects of economic transactions and events that affect an entity should be reflected in the entity's financial information at the time they occur.
   • Association of costs and expenses with income
     • all costs and expenses of an entity must be identified with the income they generated in the same period, regardless of the date they are made.
   • Valuation
     • economic transactions and events carried out by an entity must be quantified in monetary terms
   • Economic duality
     • affirms that each resource available to an entity was generated by third parties, which have rights and interests over the assets of the entity.
   • Consistency
     • establishes that the assumptions and rules through which information was obtained accounting, have a stability that facilitates their comparability over time

9. Particular rules

   • Prudential criterion
     • conservative position that the public accountant is recommended to adopt to resolve any dilemma that presents the application of particular rules in specific cases.
   • Supplementation
     • It consists of applying international financial reporting standards, when there is no local standard for a particular situation