Qualitative Characteristics of Accounting Information (SFAC No. 2)
(SFAC No. 2) Qualitative Characteristics of Accounting Information
The accounting level of the conceptual framework is basically divided into two parts.
Elements of Financial Statements (SFAC No. 6)
Elements of Financial Statements (SFAC No. 6)
The second part of the conceptual framework of accounting is ten important elements of financial statements.
Objectives of Financial Reporting (SFAC No. 1)
Objectives of Financial Reporting (SFAC No. 1)
The first step in the conceptual framework of accounting describes the purpose of the report.
Importance of Conceptual Framework
The conceptual framework of accounting is a set of guidelines or constitutions by which all accounting activities are developed.
Statement of Financial Accounting Concepts (SFAC)
The conceptual framework of accounting is the principles of the constitutional theory and application of accounting.
Reversing Entries
A reversing entry is made on the first date of the subsequent accounting period. Reversing entries are not required for all adjusting entries.
Closing Entry
Closing entries are the journal entries that are given to transfer the balances of all nominal accounts to the final account to determine the financial results.
Accounting Methods – Cash & Accrual
There are 2 methods of accounting. One is cash based and the other is accrual based.
Errors in Accounting
Classification of Errors
1. Errors Detected by Trial Balance. 2. Errors not Detected by Trial Balance.
Suspense Account
Accounts which cannot be ascertained are called suspense accounts. It can be said that the transactions which cannot be entered in the correct books.