Question

1.Discuss the essential characteristics of an asset as described in the Conceptual Framework.

2.Discuss the essential characteristics of a liability as described in the Conceptual Framework.

3. Describe the qualitative characteristics of financial information according to the Conceptual Frame-
work, distinguishing between fundamental and enhancing characteristics.

Answer 1

1.According to Conceptual Framework,An asset is resource controlled by an organisation by effects of past events and from which future economic benefits are expected to flow to the entity.

2..According to Conceptual Framework, A liability is defined as present obligation of an organisation arising out of it's past events ,the settlement of which is expected to result in outflow of resources from organisation.

3.Qualitative Fundamental characteristics of financial information according to the Conceptual Framework are Relevance and Faithful Representation. Relevance focuses over recording only relevant informations in books of accounts.While,Faithful Representation focuses over presenting true and fair informations.
Qualitative enhancing characteristics are Timeliness,Understandibility,Verifiability and Comparability.

Enhancing characteristics of Conceptual framework focuses over making financing system more adaptable according to the need of present environment while Fundamental characteristics focuses over Traditional characteristics of Financial statements.