Conceptual framework provides a basis for financial accounting concepts for enterprises.
　　FASB conceptual framework called Statements of Financial Accounting Concepts （SFAC）。
　　SFAC serves as a basis for all FASB pronouncements.
　　The SFAC are not GAAP
　　FASB and IASB have a joint project to converge their financial reporting frameworks.
　　SFAC NO. 8 Conceptual Framework for Financial report is the result of convergence. （F1-7）
　　1 objective， 2 Fundamental， 4 Enhancing.
　　1 objective – Decision useful （F1-7）
　　2 fundamental qualitative characteristics – FAR （FAithful representation + Relevance） （F1-8）
　　4 enhancing qualitative characteristics – Compare and verify in time to understand （F1-9）
　　1 Objective： DECISION USEFUL.
　　SFAC NO. 8-chapter 1： The Objective of General Purpose Financial Reporting （F1-7）
　　Who make decision？ Primary Users （existing and potential investors， lenders， and other creditors）
　　What decision？ Whether providing resources to reporting entity.
　　How useful？ use financial information （FI） to assess the reporting entity‘s prospects for future net cash inflows
　　2 fundamental qualitative characteristics – FAR （FAithful representation + Relevance） （F1-8）
　　SFAC NO. 8-chapter 3： Qualitative Characteristics of Useful Financial Information
　　FAR = FAithful representation + Relevance
　　Relevance – “Does it related to my decision？”
　　“Passing Confirms Money （PCM）”
　　“Confirm Predictive value is Material” （PCM）
　　Predictive value： Help me predict future outcomes
　　Confirming value： Help me *uate earlier prediction.
　　Materiality： Judgment. If an omission or misstatement of the information could affect the decision made by users， then it is material.
　　Faithful Representation - “Can I depend on it？”
　　“Completely Neutral is Free from error”
　　Completeness： All facts embedded in the information.
　　Neutrality： Free from bias； focus is on objectivity and balance.
　　Freedom from Error： Judgement. Would a sufficiently knowledgeable third party derive the same result？
　　4 enhancing qualitative characteristics – Compare and verify in time to understand
　　SFAC NO. 8-chapter 3： Qualitative Characteristics of Useful Financial Information
　　4 enhancing qualitative characteristic
　　“Compare and Verify in Time to Understandability”
　　Comparability （Consistency）： across entities or from period to period.
　　Verifiability： Independent observers can reach consensus.
　　Timeliness： Recent enough to influence decision.
　　Understandability： Comprehensible by a user with reasonable understanding of business.
　　SFAC No. 4， “Objectives of Financial Reporting by Nonbusiness Organizations” （F1-10）
　　Nonbusiness organizations （Not for profit）
　　-Most of resources come from contributions and grants （Non-reciprocal）
　　-Operating purposes are other than for profit
　　-Lack ownership interest
　　Objectives is provide useful information in
　　-Making resource allocation decisions
　　-Assessing service and the ability to provide services
　　-Assessing management stewardship and performance
　　-The nature and relationship of in/out flow of resource
　　SFAC No. 5， “Recognition and Measurement in the Financial Statements” （F1-11）
　　Full Set of Financial Statements
　　Statement of financial position （the balance sheet）
　　Statement of earnings （the income statement）
　　Statement of comprehensive income （IDEA+PUFER）
　　Statement of cash flows
　　Statement of changes in owners‘ equity
　　Measurement Attributes for Assets and Liabilities （F1-12）
　　Historical cost （F2-42）： PP&E
　　Current cost （F2-42）： Inventory
　　Net realizable value （F4-23）： A/R
　　Current market value： Marketable securities
　　Present value of future cash flows： LT debt “bonds” （SFAC No.7 F1-15）
　　4 Assumptions and 6 Principles （F1-12）
　　“Ego up” + “Charm FAR”
　　4 Assumptions-“Ego up”
　　Entity Assumption
　　GOing Concern Assumption （IFRS & GAAP）
　　Monetary Unit Assumption
　　Periodicity Assumption