Free Essay

Sfac

In: Business and Management

Submitted By misterriswa
Words 656
Pages 3
SFAC (Statemen Financial Accounting Concepts) No.8

SFAC No. 8 ini pada dasarnya diciptakan oleh FASB untuk mengakomodasi konvergensi standar akuntansi dengan International Financial Reporting Standard (IFRS) yang dikeluarkan International Accounting Standard Boards (IASB). Ada perubahan mendasar yang dilakukan pada SFAC No. 8, misalnya kualitas informasi Akuntansi ini dibagi menjadi kualitas informasi utama yang terdiri dari Relevance dan Faithful Representation dan Kualitas informasi pendukung yang terdiri dari Comparability, Veriability, Timeliness & Understandability. Lebih Jelasnya di dalam Konsep Pernyataan Akuntansi Keuangan (SFAC) no. 8 ini terdiri dari 2 sub pokok bahasan yaitu mengenai : A. Tujuan Utama dari Pelaporan Keuangan Berdasarkan SFAC No. 8 tujuan utama dari pelaporan keuangan pada umumnya adalah untuk menyediakan informasi keuangan mengenai Pelaporan Entitas dari suatu perusahaan yang berguna untuk investor & kreditur didalam pengambilan keputusan mengenai penyediaan sumber daya untuk entitas tersebut, dimana keputusan-keputusan tersebut melibatkan keputusan pembelian, penjualan, atau memegang instrumen ekuitas dan hutang dan menyediakan atau menetap pinjaman dan dalam bentuk-bentuk kredit. Selain itu menurut Standar ini Tujuan Utama dari Pelaporan Keuangan lainya adalah dimana pada dasarnya Tujuan umum laporan keuangan tidak dirancang untuk menampilkan nilai dari suatu entitas pelaporan, tetapi mereka memberikan informasi untuk membantu pengambilan keputusan yang dilakukan oleh Investor & Kreditor untuk memperkirakan nilai dari Pelaporan Entitas Perusahaan terkait tersebut. Selain itu Tujuan umum dari Pelaporan Keuangan lainya adalah untuk menyediakan informasi tentang posisi keuangan suatu Entitas Pelaporan, yaitu informasi tentang Sumber Daya Ekonomi Entitas dan tuntutan terhadap perusahaan pelapor. Laporan keuangan juga memberikan informasi tentang dampak transaksi dan peristiwa lain yang mengubah sumber daya ekonomi suatu entitas pelaporan dan klaim dari pelaporan keuangan perusahaan tersebut. Selain itu Kinerja Keungan itu sendiri berdasarkan Akuntansi Akrual.

B. Karakter Kualitatif yang terjadi dari penggunaan Inforamsi Keuangan Karakter Kualitatif yang terjadi dari penggunaan Informasi keuangan di sini dimaksudkan untuk mengidentifikasi jenis informasi yang mungkin paling berguna kepada Kreditor & Investor, untuk membuat keputusan tentang perusahaan pelapor berdasarkan informasi dalam keuangan laporan (informasi keuangan). Laporan keuangan juga memberikan informasi tentang sumber-sumber daya ekonomi perusahaan pelapor itu, klaim terhadap entitas pelaporan, dan efek dari transaksi dan peristiwa lain dan kondisi perubahan dari sumber daya dan klaim perusahaan pelapor tersebut. Selain itu Karakter Kualitatif yang ditimbulkan dari revisi pernyataan ini adalah perubahan yang terjadi pada kualitas informasi utama yang terbagi menjadi dua yaitu Relevansi & Representasi dari Pelaporan Keuangan tersebut sementara itu kualitas informasi pendukung yang ada dibagi menjadi Komparabilitas atau perbedaan yang dapat terjadi, Veriability, tepat waktu, dan dapat mudah dimengerti.

* Relevan Informasi keuangan yang relevan mampu membuat perbedaan dalam keputusan yang dibuat oleh pengguna. Informasi yang di dapat mampu membuat perbedaan dalam membuat keputusan bahkan jika beberapa pengguna memilih untuk tidak mengambil keuntungan dari itu atau sudah menyadari hal itu dari sumber lain. * Representasi Laporan keuangan merupakan fenomena ekonomi dalam kata-kata dan angka. Untuk menjadi berguna, informasi keuangan tidak hanya harus mewakili fenomena yang relevan, tetapi juga harus mewakili fenomena yang memiliki tujuan untuk mewakili. Untuk menjadi representasi sempurna, penggambaran itu akan memiliki tiga karakteristik. Dan memang harus lengkap, netral, dan bebas dari kesalahan.

* Komparatif Komparatif adalah karakteristik kualitatif yang memungkinkan pengguna untuk mengidentifikasi dan memahami kesamaan, dan perbedaan antara, item. Berbeda dengan karakteristik kualitatif lainnya, komparatif tidak berhubungan dengan item tunggal. studi perbandingan membutuhkan setidaknya dua item. * Veriability Verifiability berarti bahwa pengamat berpengetahuan dan independen yang berbeda bisa mencapai konsensus, meskipun tidak selalu perjanjian lengkap, bahwa penggambaran tertentu merupakan representasi dari. Informasi yang dikuantifikasi tidak perlu diperkiraan titik tunggal yang akan diverifikasi. Berbagai jumlah yang mungkin dan probabilitas terkait juga dapat diverifikasi. * Ketepatan Waktu Ketepatan waktu berarti memiliki informasi yang tersedia untuk pengambil keputusan dalam waktu yang akan mampu mempengaruhi keputusan mereka. Umumnya, semakin tua informasi tersebut, yang kurang berguna itu. Namun, beberapa informasi dapat terus tepat dalam waktu yang lama setelah akhir periode pelaporan karena, misalnya, beberapa pengguna mungkin perlu untuk mengidentifikasi dan menilai trend yang terjadi. * Mudah Dimengerti Mengklasifikasikan, karakterisasi, dan penyajian informasi secara jelas dan ringkas membuat informasi keuangan tersebut dapat dimengerti.…...

Similar Documents

Premium Essay

Accounting Standards Boards Paper

...Financial Statements” consists of six major sections: | 1. SFAC No. 1. “Objectives of Financial Reporting by Business Enterprises” | 1. The objective of financial statements | 2. SFAC No. 2. “Qualitative Characteristics of Accounting Information” | 2. Qualitative characteristics of financial statements | 3. SFAC No. 5. “Recognition and Measurement in Financial Statements of Business Enterprises” | 3. The elements of financial statements | 4. SFAC No. 6. “Elements of Financial Statements” | 4. Recognition of the elements of financial statements | 5. SFAC No. 7. “Using Cash Flow Information and Present Value in Accounting Measurements” | 5. Measurement of the elements of financial statements | | 6. Concepts of capital and capital maintenance | (Schroeder et al, 2011) The IASB focused on a review of the “Framework for the Preparation and Presentation of Financial Statements” in order to further develop its concepts and to also give more guidance in accounting standards. The IASB equivalents of the original pronouncements lie in the definition of assets, liabilities and equity. Also, the IASB framework identifies two elements of the income statement, revenues and gains, and expenses encompassing losses. The FASB shows five areas of the income statement: revenues, expenses, gains, losses, and comprehensive income (Schroeder et al, 2011). This is shown in IAS No. 1, Presentation of Financial Statements, and under SFAC No. 6, Elements of Financial Statements. Both......

Words: 1131 - Pages: 5

Premium Essay

Defend the Asset/Liability Approach of Accounting for Inter-Period Income Tax Allocation.

...taxes) in the future at the future tax rates. 4. Estimates are used extensively in accounting. The use of estimated future tax rates for deferred taxes poses no more of a problem regarding verifiability and reliability than using, say, estimated lives for depreciation. 5. Because the tax expense results from changes in balance sheet values, its measurement is consistent with the SFAC No. 6 and SFAS No. 130 definitions of comprehensive income. Others may include: - Under the International Accounting Standards No. 12 “Accounting for Taxes on Income” only the liability method is allowed. - If, after being established, and before reversal, the statutory tax rate for those years change, then the deferred tax account will need to be adjusted to reflect the new rate(s). - Under this method, deferred taxes are viewed as economic liabilities for taxes payable or assets for future tax deductions. - emphasizes the usefulness of financial statements in evaluating financial position and predicting future cash flows. - Assets and Liabilities created by SFAS # 109 do meet the definitions in SFAC # 6. - SFAS #109 states that it allows for the separate recognition and measurement of deferred tax assets and liabilities without regard to future income considerations - Income tax consequences should be recognized in same accounting period as that event is recognized in the F/S. Most events will affect taxable income and pretax financial accounting income in same......

Words: 642 - Pages: 3

Premium Essay

Client Understanding Paper

...As a newly hired Staff I, you are responsible for analyzing the work papers for one of the clients of your organization. Your client is not clear about why you are asking for information on the following topics: Adjusting lower cost of market inventory on valuation “The conservatism principle and a specific accounting pronouncement, Accounting Research Bulletin No. 43 (ARB No. 43) leads to an accounting valuation method known as the lower of cost or market, or LCM. In this method the term "market" includes both the market in which the company purchases its merchandise as well as the market in which it sells its merchandise.” (Arverkamp, 2013) The Lower of cost or market aspect (LCM) is also supported and defined by SFAC No. 2 and SFAC No. 6. The LCM rule considers the market that purchases and sells the inventory.   Capitalizing interest on building construction Under FASB 34, companies must capitalize interest on construction projects. Interest cost should be capitalized as part of the historical cost of acquiring certain assets. The interest cost eligible for capitalization in most situations would be the interest cost recognized on borrowings and other obligations. The amount capitalized is an allocation of the interest cost incurred during the period required to complete the asset. This interest rate for capitalization purposes should be based on the rates of the enterprise's outstanding borrowings. (Financial Accounting Standards Board, 2012) ......

Words: 533 - Pages: 3

Premium Essay

Insuarance Terminologies

...information Constraints * Objectivity principle: the company financial statements provided by the accountants should be based on objective evidence. * Materiality principle: the significance of an item should be considered when it is reported. An item is considered significant when it would affect the decision of a reasonable individual. * Consistency principle: It means that the company uses the same accounting principles and methods from period to period. * Conservatism principle: when choosing between two solutions, the one which has the less favorable outcome is the solution which should be chosen (see convention of conservatism). Due to recent developments in the convergence of US GAAP and IFRS, SFAC No. 8 replaced SFAC No. 1 and 2 in September 2010. Chapter 3 of SFAC No 8 includes only the following constraint, Cost Constraint- The benefits of reporting financial information should justify and be greater than the costs imposed on supplying it. Conservatism is no longer a constraint, and materiality is a feature of relevance that is determined at the entity-specific level. - INCOME STATEMENT GREENHARBOR LLC - For the year ended DECEMBER 31 2010 € € Debit Credit Revenues GROSS REVENUES (including INTEREST income) ......

Words: 793 - Pages: 4

Premium Essay

Sfac # 7

...Accounting Theory and Contemporary Issues ADMS 4510 B Assignment #3 A discussion of SFAC # 7 –Present Value of Expected Cash Flows versus Exit Value As a Proxy for Fair Value Yolando Robinso SFAC 7 asserts that present value techniques should be used to estimate fair value and recommends using an expected cash flow approach. Critically discuss the contents of this SFAC and critically compare it to using exit value as the proxy for fair market value. Statement of Financial Accounting Concepts (SFAC) No. 7 was introduced by Financial Accounting Standards Board (FASB) in February 2000 as an answer to a need. To begin, let us first see what was needed. Traditionally, professionals have used the Historical Model for valuation of assets, both tangible and intangible. However, as the use of present value techniques became more widely used in accounting and financial fields, it raised questions and discussions prompting the introduction of SFAC 7. It is designed to offer guidance on present value techniques in accounting measurements . “It is expected to serve the public interest by providing structure and direction to financial accounting and reporting to facilitate the provision of evenhanded financial and related information that helps promote the efficient allocation of scarce resources in the economy and society, including assisting capital and other markets to function efficiently.” We understand that the public is interested in the amount, timing and......

Words: 1352 - Pages: 6

Premium Essay

Conceptual Framwork of Accounting

...FASB issued six Statements of Financial Accounting Concepts (SFACs) that relate to financial reporting for business enterprises. These concept statements provide the basis for the conceptual framework. i. SFAC No. 1- Objectives of Financial Reporting by Business Enterprises: First, the objective of financial reporting is to provide information about the company that is useful to potential investors, creditors and lenders in making decisions about the company. Because these parties cannot require that companies provide this information about company resources and claims on the company's assets, they rely on financial reports to give summaries of this information. ii. SFAC No. 2- Qualitative Characteristics of Accounting Information: The second section provides information on what makes financial information useful and how to balance usefulness with cost considerations. This section of the conceptual framework tells financial statement users that information should be relevant and faithfully represent the underlying economics of the company. Additionally, the section provides guidelines for how to enhance these characteristics. iii. SFAC No. 3- “Elements of Financial Statements of Business Enterprise,” provides definitions of items in financial statements, such as assets, liabilities, revenues, and expenses. This section might be the most useful for a small-business owner. iv. SFAC No. 5- “Recognition and Measurement in Financial......

Words: 1834 - Pages: 8

Premium Essay

Reporting Paper

...pension cost be recognized? • How should pension costs divided to the individual periods? • Should the information on status of pension be included in the statements of changes in financial position? (Schroeder, Clark, & Cathey, 2005, p. 449). These views by the FASB would require companies using the defined benefit plans net pension to recognize liability or net asset on their balance sheet because it uses the matching principle according to GAAP. El Instituto americano de contables públicos certificados (AICPA) estuvo en desacuerdo con el reconocimiento de costo de pension como pasico o activo, porque las cantidades involucradas de acuerdo con SFAC No.6 American Institute of Certified Public Accountants (AICPA) disagreed with recognizing the pension costs as an asset or liability, because the amounts involved according to SFAC No. 6 is not in compliance with the definition of an asset or liability. SFAS No. 87 and Pension cost In 1985, SFAS No. 87 provisions requires a standardized method of measuring net pension cost, immediate recognition of pension liability when accumulate benefits exceed the fair value, and more detailed disclosures on the pension costs (Schroeder, Clark, & Cathey, 2005, p. 451). Choosing a defined benefit pension plan the following components are required to be included net pension cost; service cost, interest cost, return on plan assets, amortization of unrecognized prior service cost, amortization of gains and losses, and amortization......

Words: 1060 - Pages: 5

Premium Essay

Sec 101

...Recognition ; Emerging Issues Task Force (EITF) Issue No. 88-18, Sales of Future Revenues, No. 91-9, Revenue and Expense Recognition for Freight Services in Process, No. 95-1, Revenue Recognition on Sales with a Guaranteed Minimum Resale Value, and No. 95-4, Revenue Recognition on Equipment Sold and Subsequently Repurchased Subject to an Operating Lease ; and FASB Statement of Financial Accounting Concepts (SFAC) No. 5, Recognition and Measurement in Financial Statements of Business Enterprises .1 If a transaction is within the scope of specific authoritative literature that provides revenue recognition guidance, that literature should be applied. However, in the absence of authoritative literature addressing a specific arrangement or a specific industry, the staff will consider the existing authoritative accounting standards as well as the broad revenue recognition criteria specified in the FASB's conceptual framework that contain basic guidelines for revenue recognition. Based on these guidelines, revenue should not be recognized until it is realized or realizable and earned.2 SFAC No. 5, paragraph 83(b) states that "an entity's revenue-earning activities involve delivering or producing goods, rendering services, or other activities that constitute its ongoing major or central operations, and revenues are considered to have been earned when the entity has substantially accomplished what it must do to be entitled to the benefits represented by the revenues" [footnote......

Words: 11971 - Pages: 48

Premium Essay

Client Understanding Paper

...Generally Accepted Accounting Principles instructs that when inventories decline in value the future selling price should move in the same direction in the same time period. The American Institute of Certified Public Accountants provides the following definitions for use when applying the lower cost or market rule to inventories. These definitions are: 1. Market should not exceed the net realizable value. 2. Market should not be less than net realizable value reduced by an allowance for an approximately normal profit margin (Schroeder, Clark & Cathey, 2005, p. 256). Adjusting lower cost of market inventory valuation satisfies the qualitative characteristics of account information contained in SFAC No. 2. It also satisfies the definitions of assets and losses contained in SFAC No. 6. There are arguments that the use of lower of cost or market rule for inventories, are only applied for downward adjustments, the arguments have been ignored because the importance of maintaining conservative financial statements was deemed more important. Capitalizing interest on building construction has been an issue because of the question of when to capitalize the interest on the building construction. Because materials and supplies are needed for the construction of the building extra financing is needed from outside sources. Through this financing interest is incurred during the construction period. There is a debate to how the interest incurred should be recorded. Some......

Words: 1489 - Pages: 6

Premium Essay

Eaton

...on Consolidated Financial Statements d. Consolidated Financial Statements e. Management Discussion & Analysis f. Directors and Officers g. Shareholder Information The Annual report is presented well, polished, and has great graphics. Even so, the question we must ask --- Is this report useful for Eaton’s potential investors. It meets the standards of SFAC No. 1 (Statement of Financial Accounting Concepts) Speaks to the objectives of financial reporting by business enterprises as it presents the goals and purposes of accounting. 1. It defines the users of accounting information a. Present & potential investors and creditors b. Defines the user as the average prudent user with a reasonable understanding of economic and business situations 2. Defines the objectives of financial reporting a. To provide information that is useful in making rational investment, credit, and similar decisions b. To help users assess the timing and uncertainty of cash flows c. To provide information on economic resources, claims, and changes in them. We understand that the Annual report looks good and meets the standards of SFAC#1. It, like most annual reports, provides useful information, but it is not very easy to translate it into meaningful data that can be used to make investment decisions. Personally, I have recently been taking some financial and managerial accounting classes, and even though the professor is fantastic and I am learning a lot, I still have trouble taking......

Words: 499 - Pages: 2

Premium Essay

Safc

...According to Statement of Financial Accounting Concepts (SFAC), the primary objective of financial reporting is to communicate financial information about a business entity to its external users such as present and potential investors and creditors. Financial reporting also provides information to help the users assess the amount, timing and uncertainty of future cash flows. Another objective is to present information about an entity’s economic resources and changes in the resources resulting from financial effects of the business transactions and events, etc. Due to the existence of information asymmetry, external users know less about the entity and its operations than management. They need to rely on information that the management provides to make rational business and economic decisions. Financial reporting assists external users, particularly investors and creditors, with deciding expectations about the entity’s future performance and identifying the entity’s financial strengths and weaknesses. When they are confident in its ability to generate favorable cash flows, from which they will obtain interests and benefits, they will provide resources such as investment and loan funds for entity’s development. The objectives of financial reporting do not address specific solutions for the Polluter Case, but they do provide some guidance. Purchase and sale of emission allowances for Polluter Corporation can possibly be classified as investing activities (as intangible assets)......

Words: 286 - Pages: 2

Free Essay

Sfac 5

...Business Case for Cloud Collaboration Case Studies and Testimonials Some organizations prefer to host their IT systems in their own data center. But on-premises communications solutions are not for everyone, and many organizations are shifting to a secure hosted collaboration solution in order to: • Increase agility to quickly scale up or down • Extend collaboration applications to anyone, anywhere • Free up IT resources to focus on core business • Reduce total cost of ownership (TCO) • Replace an aging voice or video communications system The cloud can reduce complexity for users who just want to get their jobs done and enable new levels of collaboration. This brochure shares the experiences of actual customers who replaced their on-premises communications system with a secure Cisco Powered cloud service based on Cisco Hosted Collaboration Solution (HCS). © 2013 Cisco Systems, Inc. All rights reserved. 1 Table of Contents Increased Agility to Scale Up and Down.........................................................................................3 Global Document Management Company Sets Up Contact Center in Two Weeks...............................3 Life Insurance Company Adds New Locations Without Increasing IT Staff............................................4 Testimonial: Scotts LawnService Scales Contact Center Agents for the Season.................................5 Extend Collaboration Applications to Anyone, Anywhere, Using Any Device .........................

Words: 3680 - Pages: 15

Premium Essay

Going Public

...Green Dreams Evaluation Exercise Answer these questions on a group basis: 1. Develop a chart similar to the evaluation handout and fill in all of the pieces for the main accounting issue: “How should Green Dreams account for the sales/use taxes?” Use the provisions of SFAC #6 and FASB #5 to reach a conclusion. |Elements of Reasoning | |What is the purpose (objective)? |Determine how Green Dreams should account for their sales/use taxes according to GAAP. | |What is the issue? |How should Green Dreams account for the sales/use taxes? | |What is the information (facts)? |Almost 100% of Green Dreams’ plant equipment is purchased outside of its home state. | | |State law requires Green Dreams to pay use tax. | | |Green Dreams has a company policy not to remit use tax due for out of state purchases. | |What are the concepts (Standards)? |FAS #5 conditions met for use tax (probable liability had been incurred at the date of the financial | | ...

Words: 342 - Pages: 2

Free Essay

Csr and Earnings Quality

...The Relationship between the Alternative Earnings Quality Measures and their Association with Stock Return: an Empirical Study on Non-financial Firms listed in ASE Introduction: Statement of financial accounting concept No. 1 (SFAC No. 1) state that “Financial reporting should provide information about an enterprise’s financial performance during a period.” Borrowing language from SFAC No. 1, we define earnings quality as follow: Higher quality earnings provide more information about the features of a firm’s financial performance that is relevant to a specific decision made by a specific decision maker. (Dechow&Schrand, 2010) In accounting and finance literature, several proxies for earnings quality have been used in empirical research. This may create problems in comparison the results of these studies, since these studies have used different measures for earnings. It is not clear whether these earnings quality measures are good proxies for each other. The purpose of this is to examine empirically the extent to which the alternative earnings quality measures are correlated, and whether they are good proxies for each other. In addition, the studies will investigate the association between earnings quality measures and firm’s realized stock return individually to find out which earnings quality measure is the most associated with stock return. And which measure explains the largest proportion of the variation in stock returns. The study will examine two set of earnings......

Words: 254 - Pages: 2

Premium Essay

Fasb vs Iasb

...observance. Second, work generally for the improvement and harmonization of regulations, accounting standards, and procedures relating to the presentation of financial statements.” These two entities are working on the same basis but for two different groups. FASB standards are based on United Stated users. On the other hand, IASB standards are based on worldwide users. Both setting accounting standards entities are based on similar conceptual frame work and qualitative characteristics. In the table bellow a summary description of these concepts is presented. FASB FINANACIAL CONCEPTS | IASB FINANCIAL CONCEPTS | 1.SFAC No.1 “ Objectives of Financial Reporting by Business Enterprises” | 1. “Objective of financial statements” | 2. SFAC No.2” Qualitative Characteristics of Accounting Information” | 2. “Qualitative characteristics on financial statements” | 3. SFAC No. 5” Recognition and Measurement in Financial Statements of Business Enterprises” | 3. “The elements of financial statements” | 4. SAFC No. 6” Elements of financial Statements” | 4.”Recognition of the elements of financial statements” | 5. SAFC No.7” Using Cash Flow International and Present Value in Accounting Measurements” | 5.”Measurements of the elements of the financial statements” | | 6. “Concepts of capital and capital maintenance.” | Note. From Schroeder, Clark, and Cathey (2011), Financial Accounting Theory and Analysis, (10 ed., pgs 103-104) FASB QUALITATIVE CHARACTERISTICS |......

Words: 1134 - Pages: 5