Page 87 - F1 Integrated Workbook STUDENT 2018

The Conceptual Framework

Objectives and assumptions

2.1 Objective of financial statements

he objective of financial reporting is to provide information about the reporting entity
that is useful to a wide range of users in making economic decisions.

2.2 Underlying assumptions

The Framework states that the underlying assumption for the preparation of financial
statements is the concept of going concern.

2.3 Going concern concept

The going concern concept means the financial statements are prepared on the
basis that the enterprise will continue trading for the foreseeable future. It is assumed
that the enterprise neither has an intention nor the need to liquidate or significantly
reduce the scale of its operations. If this was to be the case the financial statements
would be prepared on a different basis, e.g. valuation of assets on the statement of
financial position.

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