Conceptual framework	it is a set of basic underlying assumptions, principles and concepts that provide the basis for logical recognisition and reasurement, through deductive reasoning, of items disclosed in the annual accounts
Accounting standars	1. Conceptual framework 2. Accounting principles 3. Assesment criteria 4. Limitations of accounting information and creative accountancy
Conceptual framework, main functions	Facilitate the task of issuing acc. standards Provide theoretical reference to solve discrepancies To reduce the number of accounting alternatives
Conceptual framework; Measurement 10 criterias	Historical cost fair value net realisable value present value value in use sales cost amortised cost transaction costs book value residual value
Conceptual framework; 6 principles	Going concern acctual basis consistency prudence offsetting relative importance
Going concern	the comapany wil continue in the foreseeble future
prudence	this criteria should be applied when estimations and measurments are made in conditions of uncertainty expenses, revenues
offsetting	assets, liabilities, income and expenses are valued separetly in the financial statement
relative importance	strict application of some accounting principles and criteria may be waived where the relative importance in quantitative and qualitative terms of variation produced by such an event is negligible and consequently does not altern the expression of the true and fair view.
consistency	maintaned over time
accrual basis	the effects of transactions and other economic events shall be recognised when they occur
Components of annual accounts	assets liabilities equity revenues expenses
Components of annual accounts; assets	goods, rights and other resources collected by he company: produce cash and monetary recources
Components of annual accounts; liabilites	obligations
Components of annual accounts; equity	internal resouces EQ= assets - liabilites
Components of annual accounts; revenues	increases in company's equity
Components of annual accounts; expenses	decreases in comany's equity
1. Historical lost on cost	it is a cost of acquisition on production --> annalytical accounting
2. Fair value	it is the value of which an asset can be exchanged on liability settled. By two parts: objective evaluation
3. Net realisable value	is the amount that the company can obtain by selling the asset in the market in the ordinary course of the business, less the necessary cost to make the sale. In case of raw materials and WIP --> the estimated cost to complete the production market value on sale - cogs - estimated cost to complete the production
4. Present value	amount of cash inflow and cash outflow expected to arise on an asset or liability, in the ordinary course of the business.
5. Value in use	--- of an asset on a cash generating unit is the present value of the future cash flows expected to be obtained through its use in the ordinary course of the business and, where applicable, its disposal, taking into consideration its present state, discounted at a market risk-free rate of interest and adjusted for any risk to the asset which the estimated future cash flow have not been adjusted
6. Sales cost	= cogs incremented costs directly attributable to the disposal of the asset that the company would not have incurred had it not decided to make the sale
7. Book value	it is the net amount of which an asset or liability is recognised in the balance sheet, after deducting accumulated amortization or depreciation and any accumulated impairment in the case of assets
8. Amortized cost --> financial instruments	initial value of asset or liability - principal repayments +/+ accumulative imputations of refund premiums - impairment losses on assets
9. Residual value	Amount that the company would get from the disposal of the asset, after deducting the cost of disposal

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