A "best CPA" candidate in the west Omaha area explains a basic accounting concept:
Objectives, qualitative characteristics and elements de-mystified:
The focus of the FASB concepts statement that underlie this one is usefulness of financial reporting information in making economic decisions - reasoned choices among alternative uses of scarce resources. Concepts Statement Number 1, according to our Omaha CPAs, emphasizes usefulness to present and potential investors, creditors and others in making rational investment, credit and similar decisions. Concept statement 4, on the other hand, emphasizes usefulness to present and potential resource providers and others in making rational decisions about allocating resources to not-for-profit organizations. Concepts Statement number 2 emphasizes that usefulness of accounting and financial reporting information for those decisions rests on the cornerstones of relevance and reliability.
The definitions in this Statement are of economic things and events that are relevant to investment, credit and other resource-allocation decisions and thus are relevant to financial reporting. Those decisions involve committing resources to an entity. The elements defined are an entity's accounting resources, the claims to or interests in those resources, and the changes therein from transactions and other events and circumstances involved in its use of resources to produce and distribute goods and services, and, if it is a business enterprise, to earn a profit. Relevance of information about items that meet those definitions for Omaha businesses stems from the significance of an entity's resources and changes in resources.