Understanding the Conceptual Framework for Financial Statements:

School: University of New England - Course: ACCOUNTING AFM301 - Subject: Accounting

matching principle apply so that we can work out a gross profit on sales. Going concern- this means that the firm is valued on the basis that its going to stay in business not the breakup value of all of its assets. FOUR PRINCIPLES Understandability -Accounts have to be capable of being understood by somebody who takes care to read the accounts and someone who has had training in accounting. Relevance- information of accounts should be directly useful to making a decision whether to buy or sell or hold shares. REliability -Theaccounts can be trusted because they are compiled on a consistent basis over time. Comparability- they conform to the standards or other guidelines so that your accounts can be compared with accounts prepared by competitors. FIVE ELEMENTS Assets - Liabilities Equity Income Expenses