According to the IASB, the purpose of the Conceptual Asset, Liability and Equity IFRSs deal with

Framework is to: identification,

IT IS NOT AN IFRS AND IT An asset is:
(a) assist the IASB in developing IFRS so that they are • a present economic resource • controlled by a
recognition,
DOES NOT OVERRIDE ANY based on consistent concepts measurement,
reporting entity • as a result of past events.
SPECIFIC REQUIREMENT IN presentation,
(b) aid the preparers of financial statements to develop
A liability is:
ANY IFRS • a present obligation of a reporting entity • to and disclosure
consistent accounting policies
in the absence of an applicable Standard, or when a transfer an economic resource • as a result of past requirements in
choice may be made between events. general-purpose
policies; and to financial
Equity is the residual interest in entity after statements
(c) assist all parties to understand and interpret IFRS. deducting all the liabilities.

The objective of general purpose financial reporting is Qualitative characteristics are those attributes that
to provide financial information about a reporting make financial information useful.
entity to its existing and potential investors, lenders To be useful, financial information must be relevant
and other creditors that they find useful when making and faithfully represent what it purports to
decisions regarding providing resources to the entity. represent. The usefulness of financial information is
– PRIMARY USERS enhanced if the
information is comparable, verifiable, timely and
Other users of general-purpose financial reports are understandable.
regulators (such as tax authorities)
and the general public. For financial statements to be useful, they must
comply with two types of qualitative characteristics,
namely fundamental (essential) qualitative The cost of providing reporting information must be
characteristics and enhancing qualitative justified by the benefits derived from the information.

A framework serves as
a reference for an area
Purpose of the Conceptual
of enquiry and often
Framework is, inter alia, to assist
provides the is a set
• in developing future standards;
of theoretical concepts
An asset or liability is recognized in the Five measurement bases that are often • in harmonizing legislation and
and principles, which
statement of financial position only if that asset reducing the number of
forms the basis for encountered in a set of financial statements.
or alternative accounting
establishing and
liability, and of any resulting income, expenses, Historical cost, realizable value, current cost, treatments; and
developing reporting
or changes in equity, provide the users of the present value, and fair value. • users in interpreting the
financial statements with useful information. information in financial
statements when compiled
Useful information, in turn, must be relevant and
according to IFRS.
faithfully represented.

Conceptual Framework can be described as a

group of interrelated objectives and fundamental Two basic concepts of capital and capital
theoretical principles that serve as a frame of maintenance, namely (1) the financial concept
reference for financial accounting, and more and (2) the physical concept.
specifically financial reporting. The financial concept of capital is synonymous
The Conceptual Framework is both normative with the net assets or equity of a business entity.
(prescriptive) and descriptive (explanatory) in
nature, with an overriding requirement for The physical concept pertains to the productive
financial information to be useful (meaning that capacity of the entity; for example, the units of
information must be production per day.
relevant and faithfully represented)
Definitions that you will encounter in IAS 1.
• General-purpose financial statements Statement of financial
• Impracticable position
• Material omissions
• Notes Consists of three elements
• Owners namely
• Profit or loss Statement of profit or loss and other
• Other and total comprehensive income. comprehensive income
A statement of profit or loss and other comprehensive
income provide information about the
results of its operations. In simple terms, it shows
An asset is classified as current when whether the entity made a profit or loss on
it satisfies any of the following its operating activities during a financial period.
criteria: Definitions of income and expenses Statement of changes in equity
• It is expected to be realized, or  increases in assets, or decreases in Examples of income transactions
intended for sale or consumption, in liabilities are sales, fees earned, services A statement of changes in equity is a statement of
rendered, interest earned, rent changes in the capital structure of an entity
the entity's normal operating cycle.  hat result in increases in equity
earned, and dividends received.
• It is held primarily for trade.  other than those pertaining to contributions and shows the movement in equity (ownership) between
• It is expected to be realized within that were received for the purchases of two reporting periods.
equity claims. Examples of expense
12 months after the statement of transactions are cost of sales,
financial position date. Statement of cash flows
Expenses are: rental expenses, and interest
• It is cash or a cash equivalent  decreases in assets, or increases in expenses.
unless it is restricted from being liabilities Notes
exchanged or used to Conceptual Framework
Income arises from increases in equity that do not
settle a liability for at least 12 months identifies two main Notes represent information about the basis of
result from contributions received from the holders of
after the statement of financial equity claims (that is, a capital contribution received
categories of useful preparation and the accounting policies that an entity
position date. measurement bases, namely subscribe to in the preparation of financial statements.
from a partner, or shares issued to shareholders are
the historical cost and the
not recognized as income but as financing activities).
A liability is classified as current Expenses arise from decreases in equity that do not
when it satisfies any of the following result from distributions that were made to the
criteria: holders of equity claims (that is, the payment of
dividends to shareholders is not recognized as an
 Relationship marketing focuses on the following six areas:
Ð Production
orientation stems
1 Growth through scope and partnering. A business from the idea that
can only grow stronger through partnerships with its consumers prefer
stakeholders. cheaper products
that are always
available.
2 Improvement of chains of relationships. The
business should endeavor to improve its Ð Sales orientation
relationships with its supply chain partners in order comes from the
to remain appealing to them. idea that large-
3 Reconsideration of the four P's of marketing. The scale selling and
traditional methods of marketing and doing promotional efforts
business may have to change because are important to
stakeholders are more involved in the way attract customers
businesses operate. For example, suppliers may to the firm's
lower the price of their products to allow the products/services.
business to sell its products to customers at a Ð Marketing
reasonable price. orientation arises
from the idea that
4 Relationship managers. These are people who a firm can only
closely monitor relationships/ partnerships and achieve its goals
Marketing activities to bridge the gaps The definition of marketing in the proactively endeavor to make them productive. by determining
Ð Primary marketing activities. The prescribed book emphasizes the process and thus satisfying
primary marketing activity is and exchange of goods and services. 5 Selection and rejection of customers. It is a the demands of its
transport. This includes all forms known fact that not all customers are profitable target market
1 Exchange. Marketing occurs more adequately
of transportation, from only if two or more people to the business. Hence selected/exclusive
nonmotorized (eg horses or than its rivals.
exchange something of value customers need to be managed and the
walking) to motorized with each other. If you buy a relationships with them maintained at all costs.
transportation (eg trucks and Coca-Cola from Pick n Pay, you
buses). must pay money in return for it. 6 Technology in communication.
In other words, an exchange
Telecommunication gadgets, such as
Ð Auxiliary marketing activities. takes place.
teleconferencing, and e-mail facilities enhance
Auxiliary (secondary) marketing
the relationship between a business and its
activities include obtaining and 2 Marketing mix. A typical
partners/stakeholders.
supplying information, marketing process takes the
standardization and grading, four marketing mix elements
storage, financing and risk-taking. into consideration, namely
product, price, place, and Green marketing includes all those processes and
Ð Exchange marketing activities. promotion. These are known as programmes directed towards the enhancement of
These activities involve buying and the four P's of marketing. the environmental image.
Management tasks involve an ongoing
selling.
process of planning, implementation, and
There are seven gaps between production and
control. This means that the subsections of
consumption.
the marketing section should plan,
implement, and control the marketing
processes. An integrated approach should
Internal marketing stems from the idea that Four key principles of the
be followed at all times. An integrated
employees are regarded as internal marketing concept include
customer orientation, approach involves ensuring that all activities
clients/customers. Hence all organisations should
profit orientation, systems function as a unit/whole in a coordinated
seek to take good care of their employees and
orientation (organizational manner. This is absolutely essential if an
encourage them to produce quality goods and
integration) and social organization wishes to satisfy the needs of
services.
responsibility. its customers.