Characteristics and Limitations of Information Provided by Financial Reporting
Concepts Statement No. 1

§ Primarily financial in nature--generally quantified and expressed in units of money
§
**Important**
The information provided by financial reporting pertains to individual business enterprises, (which may comprise two or more affiliated entities), rather than to industries or an economy as a whole or to members of society as consumers.
"Financial reporting may provide information about industries and economies in which an enterprise operates but usually only to the extent the information is relevant to understanding the enterprise. 



§ Often results from approximate rather than exact measures
"The measures commonly involve numerous estimates, classifications, summarizations, judgments, and allocations. The outcome of economic activity in a dynamic economy is uncertain and results from combinations of many factors. Thus, despite the aura of precision that may seem to surround financial reporting in general and financial statements in particular, with few exceptions the measures are approximations, which may be based on rules and conventions, rather than exact amounts."


§ Largely historical in nature; reflects the financial effects of transactions and events that have already happened
§ Financial reporting is but one source of information needed by those making economic decisions
§ Information provided involves a cost to provide and use.  Benefits of information provided should be at least equal to the cost involved to produce.

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