the Conceptual Framework for Financial Reporting

A conceptual framework is a set of broad ideas that help properly identify a subject, and help frame the questions and solutions. The conceptual framework for GAAP is laid out in the Statements of Financial Accounting Concepts (SFAC) published by FASB. Here is an outline I often refer to.

Objective

Provide information about the reporting entity that is useful to existing and potential investors, lenders, and other creditors in making decisions that involve buying, selling, or holding equity and debt instruments and providing or settling loans and other forms of credit.

Qualitative Characteristics

Elements

Fundamental Quality: Relevance	Fundamental Quality: Faithful representation
Predictive value Confirmatory value Materiality	Completeness Neutrality Free from error
Enhancing Qualities
Comparability Verifiability Timeliness Understandability

Assets
Liabilities
Equity
Investments by owners
Distributions to owners
Comprehensive income
Revenues
Expenses
Gains
Losses

Assumptions

Principles

Constraints

Economic entity
Going concern
Monetary unit
Periodicity

Measurement
Revenue recognition
Expense recognition
Full disclosure

Cost
Industry practice

Here is a list of the Statements of Financial Accounting Concepts published by FASB, you can find the full texts at SFACs

SFAC	Title	Issue Date
No. 1	Objectives of Financial Reporting by Business Enterprises	1978 November	Superseded by No. 8
No. 2	Qualitative Characteristics of Accounting Information	1980 May	Superseded by No. 8
No. 3	Elements of Financial Statements of Business Enterprises	1980 December	Superseded by No. 6
No. 4	Objectives of Financial Reporting by Nonbusiness Organizations	1980 December	not part of above framework
No. 5	Recognition and Measurement in Financial Statements of Business Enterprises	1984 December
No. 6	Elements of Financial Statements	1985 December
No. 7	Using Cash Flow Information and Present Value in Accounting Measurements	2000 February
No. 8	The Objective of General Purpose Financial Reporting	2010 September

The Elements

Asset: - A resource with probable future economic value that an entity owns or controls with the expectation that it will provide future benefit.
Liability: - Probable future sacrifices of economic benefits that arise from present obligations.
Equity: - The remaining value in an entity after assets have been used to satisfy all liabilities.
Investments by owners: - Increases in assets of an entity created from transfer of assets from owners.
Distributions to owners: - Decreases in assets of an entity created from transfer of assets to owners.
Comprehensive income: - Change in equity (assets less liabilities) from all sources other than owner transfers.
Revenues: - Assets transferred into an entity from its business activities.
Expenses: - Assets transferred out of an entity (or internally used up) from its business activities.
Gains: - Increases in equity from peripheral or incidental transaction, not included revenues or investments by owners.
Losses: - Decreases in equity from peripheral or incidental transaction, not included expenses or distributions to owners.

The Assumptions

Economic entity assumption: - The economic activity of the entity is treated distinct and separate from its owners
Going concern assumption: - The absence of information that the entity is not able to continue indefinitely. That the entity has enough income and assets to cover foreseeable obligations
Monetary unit assumption: - The currency used to measure economic activity is going to remain relatively stable, permitting the disregard of inflation or deflation in the environment the entity operates in.
Periodicity assumption: - The life of the entity can be divided into time periods for the providing financial reports, this period is usually a year, a quarter, or a month.

The Principles

Measurement principle: - Either the Historical price (the acquisition price) or the fair value (the market price) is used to record the value of assets.
Revenue recognition principle: - Revenue is recognized when (1) it is realized or realizable and (2) it is earned.
Expense recognition principle: - Accountants try to match match expenses to revenues, the matching principle. Expenses are recognized when delivering or producing goods or rendering services. "Let the expense follow the revenues."
Full disclosure principle: - Financial statements should include enough information to permit a knowledgeable reader to make informed judgments about the financial condition of the entity

The Constraints

Cost constraint: - The benefits to be derived from providing any accounting information should exceed to cost to provide it
Industry practice constraint: - Fair presentation of financial position for a particular industry may require departure common practice because of the peculiar nature common to only that industry

The Qualitative Characteristics

Relevance

Predictive value: - The ability to help users predict future outcomes.
Confirmatory value: - The ability to confirm the accuracy of past predictions.
Materiality: - An item must be important enough to likely influence the judgment of an knowledgeable reader.

Faithful representation

Completeness: - All information required for faithful representation is included.
Neutrality: - The information is unbiased, not favoring one set of interest over another.
Free from error: - The information accurately represents the entity's financial position.

Enhancing quality

Comparability: - The ability to compare accounting information of different entities because they measure and report in a similar manner, or the same entity from period to period.
Verifiability: - The ability to have information confirmed by independent parties.
Timeliness: - The information is available to users before is loses its usefulness.
Understandability: - The information is presented in a way that a reasonably informed user can understand it.