Accounting

2024-
2025
INTERMEDIATE ACCOUNTIN
]‫[العنوان الفرعي للمستند‬

USER
[] | Microsoft (C)
Intermediate Accounting 1 - Road Map
-Conceptual Framework 02
-The Accounting Information System 03
-Income Statement and Related Information 04
-The Balance Sheet and Cash Flow Statement 05
-Cash and Receivables 07
-Valuation of Inventories 08
- Inventories Additional Valuation Issues 09
Chapter 2 – Overview of Conceptual Framework
-Identify the levels of conceptual framework.

‫التعريف بمستويات اإلطار المفاهيمي‬
-Explain level 1 –Objectives offinancial reporting .
‫الهدف من التقارير المحاسبية‬
-Explain level 3 –Recognition and measurement concepts.
‫الخصائص النوعية للمعلومات المحاسبية و عناصر القوائم المالية‬
-Explain level 2 –Qualitative characteristics of accounting information and FS
elements .
‫معايير االعتراف و مفاهيم القياس‬
Identify the levels of conceptual framework
‫التعريف بمستويات اإلطار المفاهيمي‬
The Conceptual framework has three levels on the shape of a pyramid, it
summarizes the reason for accounting, the logic behind it and the tools We used
express it, this is a chapter that you will not use in your career, but it will
provide you with a base of thinking about accounting, so its Importance is
imbedded, so take care of it.
1.First level:
Purpose of Accounting and Objective of financial reporting.
2.Second level:
Qualitative characteristics of accounting information and Financial statements
elements.
3.Third level:
Recognition and measurement principles (Assumptions, principles and
Constraints).
Explain level 1 – Objectives of financial reporting

‫ الهدف من التقارير المحاسبية‬: ‫توضيح المستوى األول‬
Overview:
Level 1 includes what is the purpose of accounting and objective of financial
reporting. So it answers the question of why we provide accounting information
to users ? This question is the fundamental of conceptual framework.
Primary users:
The capital providers (Investors in equity and Creditors for liabilities).
Objectives of financial reporting:
1- Provide financial information that is useful for current and potential users
(Creditors, investors, lenders) in making decisions.
2- Information that is useful for decision making for Capital providers may
also be helpful for other users.
3- Helping users who lack the ability to demand all financial information
needed.
Acceptable accounting method
We can use the best acceptable method by choosing the alternative that will
provide the most useful information for decision making.
Explain level 2 – Qualitative characteristics of accounting
information and FS elements
‫ الخصائص النوعية للمعلومات المحاسبية و‬:‫المستوى الثاني‬
‫عناصر القوائم المالية‬
Level 2
Qualitive characteristic FS elements
1.Fundamental
Qualities: 2.Enhancing
A.Assest
qualities:
a.relevance B.Liabilities
a.Comparability
b.Faithful C.Equity
b.Verifiability
Representation D.Income
c.Timeliness
E.Exposure
d.understandibility
Fundamental Qualities:
 Meaning of Relevance is that financial information will make a
difference in a user decision. It consist of three components.
1.Predictive value: ‫القيمة التنبؤية‬
If it has value to form investors and users expectation about the future (Forward
looking).
2. Confirmatory value:‫القيمة التأكيدية‬
If it has value to confirm or correct prior expectations (Past looking).
3.Materiality: ‫األهمية المادية‬
An information is material if we omitted it or missed it could influence users
decisions. Assessing materiality might be challenging to companies because
both nature of misstatement and magnitude should be considered. (more info in
recorded sessions).
 Meaning of Faithful Representation is that financial information

amount and description match what really existed/happened. It consist of
three components.
1.Completenses:‫المعلومات كاملة‬
All necessary information are provided.
2.Neutrality:‫عدم االنحياز‬
Not selecting information in favor of category of users over other users
interest.
3.Free from free:‫خالية من األخطاء‬

Accurate information and not misleading.
Enhancing Qualities:
Are complementary to the fundamental qualities, Enhancing qualities
will differentiate more useful information from less useful one.
A:Comparability: ‫المقارنة‬
Information is measured and reported in a similar manner for different
companies. It enable us to identify similarities and differences between
companies. Information should be consistent.
B: Timeliness: ‫التوقيت‬
Information is available to users on time (before it losses its capacity to
influence decisions).
C:Verifiability: ‫قابلية التحقق‬
When independent measurers using the same method obtain similar
results.
D:understandability: ‫قابلية الفهم‬
There is a connection between the users and the decisions they make.
Understandability is better when information is classified and presented
clearly .
Financial Statements Elements
Balance Sheet Element:
-Assets :Resources owned by company that will generate future benefits

as cash inflow.
-Liabilities: Obligation owed by company that will generate future
sacrifices as cash outflow.
- Equity : Residual interest in assets after deducting all liabilities.
Income Statement Elements:
-Income: Increase in economic benefits during the period in form of

assets inflow or decrease in liabilities that will increase equity at the end.
Income Statement Elements .
-Expenses: Decrease in economic benefits during the period in form of
assets outflow or incurrence of liabilities that will decrease equity at the
end.
Example Fund./Enhancing Qualities:

Identify the appropriate qualitative characteristics for each scenario below.
1. Qualitative characteristic being displayed when companies in the same
industry are using the same accounting method.
2. Quality of information that confirms users' earlier expectations.
3. Ignores the economic consequences of a standard or rule.
4. Requires a high degree of consensus among individuals on a given
measurement.
5. Predictive value is an ingredient of this fundamental quality of information.
6. Four qualitative characteristics that enhance both relevance and faithful
representation.
7. Completeness is a key ingredient of this fundamental quality of accounting
information.
8. Issuance of interim reports is an example of what enhancing ingredient.
Answers:
1. Comparability
2. Confirmatory value
3. Neutrality
4. Verifiability
5. Relevance
6. Enhancing qualities (to mention)
7. Faithful representation
8. Timeliness
Explain level 3 – Recognition and measurement

concepts
‫معايير االعتراف و مفاهيم القياس‬
Basic basic
cost constraint
Principles Assumptions
Measurement Economic Entity

(FV/HV) Going Concern
Revenue Monetary Unit
Recognition Periodicity
Expense Accrual Basis
Recognition
Full Disclosure
Basic Assumptions
1.Economic Entity Assumption
The Company should separate its activities from owners activities.
2. Economic Entity Assumption
Assuming the company is expected to last long enough to fulfill its
objectives and commitments (for foreseeable future).
3.Going Concern Assumption Money is the common denominator of
economic activities and provides appropriate basis for measurement.
4.Monetary Unit Assumption Companies should divide their life into
artificial time periods (Annually, Quarterly). The shorter the period the more
difficult to determine proper net income for that period.
5.Accrual Basis Periodicity Assumption Transactions that change
companies FS should be recorded in the period which event has occurred.
Revenue recognized when economic benefits is expected to flow and expense
recognized when incurred.
Basic Principles:
1.Measurement principles:
Most commonly used measurements are Historical cost and Fair value.
Selection between them depends on a trade-off between Relevance and faithful
representation.
- Historical Cost : Record based on acquisition price (More faithful rep.
than relevance).
- Fair value : It’s the price to be received from selling an asset or paying a
liability between market participants at measurement date
(More relevant than faithful).
Provide better insights and assessing of cash
flow and assets/liabilities value.
Expense Recognition
We recognize expense whenever its incurred.
Its called matching principle as the expense
should follow the revenues. Companies
recognize COGS whenever Revenues occurred.
3
Revenue Recognition
We recognize revenue in the period
whenever the performance obligation
is satisfied.
2
Full Disclosure
Providing users with sufficient
important information to influence the
users decisions.
It can be found in three places :
- Body of FS
- Notes of FS
- Supplementary information
4
Cost Constraint
Means benefits received from
information must exceed its cost

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2024-

]‫[العنوان الفرعي للمستند‬

-The Accounting Information System 03

-Income Statement and Related Information 04

-The Balance Sheet and Cash Flow Statement 05

-Cash and Receivables 07

- Inventories Additional Valuation Issues 09

Chapter 2 – Overview of Conceptual Framework

-Identify the levels of conceptual framework.

Explain level 1 – Objectives of financial reporting

Qualitive characteristic FS elements

 Meaning of Faithful Representation is that financial information

3.Free from free:‫خالية من األخطاء‬

Financial Statements Elements

Balance Sheet Element:

-Assets :Resources owned by company that will generate future benefits

Income Statement Elements:

-Income: Increase in economic benefits during the period in form of

Example Fund./Enhancing Qualities:

Explain level 3 – Recognition and measurement

Measurement Economic Entity

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